YouSaid · the spoken record

Diogo Monica

lines on the record: 74
first: 2022-06-30
most recent: 2022-06-30
sittings or episodes: 1
sources: podcast

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“My career or career trajectory and how I think about wealth, how I think about status seeking, how I think about a lot of these just core things in life that lead you towards happiness or non-happiness, I would have wished that I would have known about these authors and these books a lot earlier because I don't think personally I could have convinced Past Diogo to change its trajectory, but absolutely some of these authors could.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's a hard one just because I don't think that current Diogo could legitimately give advice to 10 year ago Diogo and have the advice be well received. It's kind of interesting for you to think that you need to go through certain experiences in life for you to actually be in the right place at the right time to learn the right lessons. And so it's just very hard for people to learn from other people's mistakes. But I would definitely say that I would just bring literature. I would bring books in authors that I have read that I would have liked to have read a lot earlier. Say David Deutsch, the beginning of Infinity, which is one of my favorite books that I just reread late last year that is just an absolutely beautiful book packed with just great insight in that in a way gives you a beautiful worldview and world model that I just am drawn to and I'm instinctively drawn to. And that has actually changed.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“By flip flops, can always buy everything. And so it's a silly example, but the level of anxiety that I had about forgetting things was just so dramatically higher than the outcome of me not actually bringing them. But yet over and over again, I kept making the same mistake. And of course, this has a lot higher implications and larger implications in life that are a lot less silly than forgetting things on a trip. But to this day, I travel a lot, and every time I'm packing my bag, I remember my mom's advice saying, Diogo, do you have your passport and you have your credit card? And that just reduces a lot of the anxiety that I have about packing.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a couple of them, I think my dad's rationality and love for technology and thinking from first principles have stayed with me for a long, long time. And from my mom's side, there's been something that is very, very unique in your life. There's problems that you make a big deal out of that are not a big deal at all. And my mom has always been very unique in the sense of how she could actually reduce problems into their core fundamental individual building blocks and then allowed me to reason through why they're not a big deal. So silly example, but when I traveled, I was always very nervous about forgetting something. I'm going to forget my belt. I'm going to forget my flip-floss. I'm going to forget something. And my mom is always taking this posture, very soothing posture of Diogo. Do you have your passport and your credit card? Those are the only two things that you need. If you reduce it down to it, you can always.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think definitely the focus on the people that get rejected and the experience of people that get rejected versus the people that get hired is something that is not intuitive at all. So how you follow up when you're rejecting, how you give that feedback, do you help people find other roles that are similar in different companies? The amount of work that goes into saying no to someone in a constructive manner, in a way that is not adversarial, in a way that is actually helpful and gives them feedback for them to improve, it is unique and people don't focus on that. In fact, we've had people that applied to Anchorage, didn't get in, and then three years later applied for Anchorage and got in because they had a different trajectory in their career and they were in a different place and we had roles that were perfect for them. So that is paid dividends again over and over again. It's unintuitive for many reasons. Number one, because you obviously want to focus on the people that got in and the people that are going to accept, but then you don't realize of the advantages of the natural effect of the 90% of people that go through your process that tell everybody else.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would absolutely say you go to companies that have done this very successful and you hire somebody that has done it before. There's a lot of unintuitive things and there are things that just seem obvious, but you don't know how much they actually matter. And so they end up not being prioritized, that somebody that is executed at a world-class team just knows instinctively.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“From day one, from literally hiring the first employee of Anchorage being a recruiter has been something that has spade dividends and has been compounding over the past four and a half years.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Made in such a way that the other 90% of people that don't get accepted have a terrific experience and will tell their friends, hey, I wasn't able to meet this bar or this was not the right opportunity for me, but you should absolutely go to Anchorage and apply to Anchorage. And I can't tell you how amazing this has been and how many references in people that we've hired have come from people that we've interviewed and have not hired. And so focusing on a world-class interview process and on leaving people with a fantastic aftertaste.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've been very lucky to have been at Square very early where Haring was world class. And so a lot of the habits that I have and a lot of the biases that I have, I can trace them to the origins of Square. I will tell you this. The first person on the payroll at Anchorage, the first person that we hired, before myself or Nathan were on the payroll was a recruiter. In fact, on our payroll system, I am actually not number one. I'm number two because this person had to set up the payroll because he sent us an email saying, hey, I want to be paid. And we answered, then go set up the payroll system. And so that was how the company started. So from very early on, we knew that a world-class hiring experience is something that you absolutely need to hiring because if you are hiring one out of 10 people that you interview, then that means that your interview process should be”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Froze the hiring for three months and then it takes you three to five months to recover to be a world class hiring machine again. Then all of a sudden you are nine months behind on hiring. And so if I had to do that one again with hindsight bias, I would have not frozen hiring or I would have kept it going in terms of the machine, but just with an even higher bar for hiring versus kind of like freezing down completely.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“At Anchridge, there was one that is interesting. I think hindsight is twenty twenty, and I still think that the decision-making process was very solid. But if you recall, when we had the first lockdown, the beginning of the pandemic in March, April 2020, we made the decision at Anchorage that we wanted to freeze hiring and we didn't know where things were going. And so we froze hiring. And for a few months, we kind of saw and tried to understand exactly what was happening. I think in hindsight, if I had known that there was V-shaped recovery, I would have obviously not frozen hiring. I think the main reason for that is that when you freeze hiring effectively, you sort of very quickly lose the muscle that you need to have a very high performing hiring machine. And even a gap of three months is enough for you to just lose the momentum. And then it becomes very hard to recover.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can I say the PhD was the biggest mistake to make that I made? I think to a certain extent it was imagine that instead of 2011 I would have joined Square in 2009 my financial outcome would have been very very different so maybe I'll say that doing a PhD was my biggest mistake”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would be an easy one, and again, also not very original, but the first one has to be my father. He taught me how to program at 12. He was very supportive throughout all my career choices. I think the only ding on my dad was that he forced me to do the PhD, which has very limited utility. That would be the first one. The second one has to be my co-founder, Nathan McCaulay. It's just been 12 years of working together. We have done all of our careers together effectively because we met so early on in our careers at Square. And he's just been somebody that has made me push for higher and higher goals, made me a better person, and it's just such a good compliment. I can't realistically say that I could have done any of this by myself. And it's just so, so great to have a partner that he trusts a thousand percent to be able to share the burden of what it is to create a company.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's less about the crypto ecosystem, but just investment ecosystem in general. I think one of my biggest pet peeves is this FOMO driven investment culture and the whole first lead starts the round type of situation where until you have a lead, nobody commits, but once you have a lead, everybody wants to commit and everybody wants to lead. So I think this dynamic happens very commonly in early stage fundraising. And to me, it's always felt like there's just lack of independent conviction in most early stage investors. And so it's consistently one of my biggest pet peeves.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“An interesting one. I would say probably unfinished cans of LaCroix is my biggest personal petive. And it's very unfortunate that my wife Molly does have this particular habit, but this is how I know it's true love.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think this is unfortunately a little bit of a lame answer, but my answer is reading. I usually aim for about 50 books a year, and it's not really a hard target. I usually go for quality and retention of the knowledge over quantity, but it's still a goal. So that's what I would say is my hobby. All the free time that I have invested is trying to achieve my 50 books a year goal”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say one that has been talked about quite a bit, but it hasn't quite materialized, is of course security tokens. The trading of equities and the transparency around ownership. And we've talked about the DCC, the fact that these systems are not transparent about who owns what. And the blockchain really is a true solution to a lot of these problems. And so I think it's been very slow moving and slow going, but there's very, very, very high potential on equities and tokenization in general of mortgages, of equities of other financial instruments that could actually gain a lot from the transparency and the speed of settlement here. So I think those are still up and coming. And they've been talked about for quite a while.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“have maybe borrowing against crypto collateral maybe participating on some blockchain whatever it is they want it and that's been absolutely fascinating to see the core businesses being changed by crypto”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Traditional infrastructure being exploited in some cases in ways that are detrimental to people. And if we had systems that were like this, that were final, that allowed us to have better settlement systems, faster, and more efficient, then we might not actually need these inefficiencies in these types of infrastructure. So they're looking at their core business and saying, hey, if I use stablecoins here, I could do X, Y, and Z. Or I could create a new product because I don't need to wait for T plus 2. Or I can reduce the risk in my systems and risk loss because there's no clawback or because fraud gets reduced or because now this is available to me and it's actually a way better product than it was before. So that's actually been the most fascinating thing has been the fintechs and the corporates coming to us and saying, hey, I want to build this on top of stablecoins and I need a regulated custodian. I need somebody to turn fiat into stablecoins and I need all of these other building blocks that”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Imagine that you want to do the following. You want after a ride, your driver gets paid immediately for that specific ride and gets to walk up to a Walgreens and use the $50 that they made from their ride to buy whatever they want. Imagine that transaction, that sequence of transaction. Somebody's dropped off, and then the next step is for somebody to swipe their visa card and then buy something using that or debit card and using those funds. That is what the system should be. There's no reason as to why these transactions shouldn't be settled individually. And it creates just different business opportunities. Same thing for food delivery. Imagine that you are paid for each delivery as soon as the delivery is done. It really takes this to a next level in terms of how money moves in the economy, how liquid these funds are, instead of paying every two months, instead of paying every four months. In fact, we all know about payday loans and about these types of inefficiencies.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the major focuses that again is very interesting about crypto is uses of stablecoin. So we talk about volatility, we talk about the space, but the reality is that one USDC is worth $1 and one die was worth $1. And so that doesn't change. And it is crypto-backed and it is a use of crypto platform, but it's not necessarily an investment in crypto as a protocol or risk asset or an inflation hedge or anything like that. Now it's just a more efficient settlement system for dollars. The thing that I've been the most surprised by has been all of these different corporates that are looking at their core businesses and they're seeing how a better system that has instant finality and has very cheap transactions can actually improve their own profits and they get to build new products. Say as a hypothetical example here if you are a food delivery company or car sharing company”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Downside of having announced this with Visa is that all of these hundreds of clients on the platform started reaching out saying, hey Diogo, I saw that you now do NFT custody. Why aren't you custodying my monkeys or my apes or my cryptopunks? And so we were a little bit forced. Our hand was a little bit forced to do something that was not on the original roadmap at all. And FT custody was not one of my priorities. But we were forced, our hand was forced, and now I would say we have a little bit of a zoo going in terms of all of these different animals that are NFTs that are stored on the platform.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“So finally, the NFC one, there's more partnerships obviously ongoing, but the NFC one was a really interesting one. Visa came to us and said, hey, Anchorage, we want you to help us buying a cryptopunk. That was the introduction. And so it's like, okay, let's take this in parts. So the goal obviously was to buy an NFT and if you want to build a product in NFTs, you obviously have to go through the experience of buying one and really clearing the rails of how do you do this. So Anchorage helped Visa. This was very much Visa's idea, Visa-led. They chose the NFT. Anchorage helped with acquiring the NFT, helped with obviously doing the due diligence on this NFT and on the seller, and is actually custodying the NFT for Visa. So there's a federally charted bank custodying an NFT, the first digital asset, the first bank ever to have this type of custody of a digital asset, which is kind of cool. And of course, it was great marketing for us and a great exposure.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“They still receive dollars, but from the actual issuer perspective, they're actually settling with civil coins. So a great hybrid of the crypto world in the fiat world.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was hard for them to get there and it was very inefficient. So if they already have stablecoins, wouldn't it be great for the settlement between these exchanges and these issuers? Wouldn't it be great if they could just settle directly on stablecoins? So if you have USDC on a consumer's wallet, why not just send the USDC to settle this transaction instead of turning USDC into dollars through an issuing bank and then Fed wiring the actual money to the card network? That is very inefficient. So this way you could actually do it more often per day, reducing risk, and you have instant finality because blockchain is not a credit-based system. There's instant finality on these blockchains. So the partnership was Anchorage Supporting the Capability Visa to receive settlements in stablecoins from these issuers versus having to receive them in fiat. And what Anchorage would do ultimately would convert stablecoins into dollars and then finish the settlement to the traditional FedWire rails with Visa. So”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“crypto.com But they don't just want to issue a normal card. They want this card to be backed by crypto. So if you have a wallet on crypto.com and you have a bunch of Bitcoin and a bunch of USDC and stablecoins and you swipe a card to buy a coffee, wouldn't it be great if you could pay for that coffee with the crypto on your wallet? So that's the core principle behind having a crypto-backed visa credential. And this is in fact a solution towards the criticism that crypto can't be accepted everywhere? No, it can. There's 60 plus million visa merchants that accept visa credentials and those visa credentials can use crypto on the back end. Yes, it's not a direct transaction on chain. You're not going with your phone and pinging in crypto, but you're still transacting with your crypto value, which is ultimately what actually matters. Now, the issue is that many of these very large growing exchanges had to create a relationship with an issuing bank, had to keep money set aside for settlements every day with the card networks, and that was very inefficient.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Custody in the fact that Visa could offer to the clients that they already have and the relationships they already have in the QU's anchorage to facilitate subcussive cryptoassets. So we would do the heavy lifting from a technology perspective on custody and on trading and then they would aggregate create networks to add value added on their APIs and then serve other institutions with it. So we announced it and that's a really cool use case because it's a perfect example of anchorage operating as a subcustodian that I've described earlier. The second partnership was very interesting one and it was about stablecoins. People think crypto is again one thing but the reality is that stable coins are one of the fastest growing areas of crypto and they don't have the volatility because they are pegged to the US dollar in 99% of the cases of stablecoins. So what FISA wanted to do in that specific partnership is there was a realization that there's these card issuers. Say there's an exchange like crypto.com.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Visa has been one of the greatest companies to collaborate with. They are very pro-crypto and they've had some very innovative takes into the space. So they were actually one of our investors in our Series B a few years ago. And we've been partnering with them on many different types of initiatives. So maybe I can give you a little bit of a flavor for three different subtypes. And I will cover the NFTs. But first, let me start with one of the things that Visa realized is that Anchorage provided the platform for custody and trading and so that they could actually build businesses on top of our platform, which is fantastic because it's absolutely what Anchorage wants to be. We want to be the platform that has the building blocks that allows any institution out there, any type of institution to build products in crypto in a safe, regulated, and easy manner. And so visa recognized that from very early on. The investment appetite there was realizing that this was the case. So the first partnership that we did was really about”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Invest in supporting individually every single one of these blockchains. And this is very costly from engineering perspective, very costly from a maintenance perspective. And it's extremely hard for maintenance. And in fact, on the other side, on the positive side, it's also a very high mode because if you want to compete against Anchorage, you have to go back for a half years and then support Bitcoin, support Ethereum in hundreds of assets. So to catch up, you have to go a lot faster than where they're going. But this is extremely, extremely interesting because since they're so sophisticated and complex and all of them are unique, the conversations with regulators also mimic this type of complexity. And so I would say that that's the major drawback of being a bank is the high scrutiny helps you in winning deals and the fact that we're at eye level from a regulatory perspective with the big banks means that Anchorage is the favorite partner for the big banks because they understand what a federal chartered is. They also have one. On the other side, that means that we are blazing the trail because we're the first ones and we're actually having to explain this increasing complexity to the regulators.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Types of technologies that are all unique and distinct. And I think that's an unappreciated fact. When we call them cryptoassets, we bundle them all on the same type of bucket. It's just cryptoassets. But the reality is that this is completely different from integrating, say, with NICE. When you integrate with the New York Stock Exchange, say that you have Amazon stock and one day you have Amazon stock and you integrate with the API and you can trade it and if Square say IPOs tomorrow then you now just have a new ticker and it's the same exact integration same exact API but now you have a new ticker crypto assets do not work like that every single blockchain is completely different than the other one so Bitcoin is completely different from Ethereum that is completely different from Solana that is completely different from flow so the reality is that you don't have shortcuts you have to”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think being a bank is interesting in the sense that the main drawback of being a bank is actually also the main advantage. And what I mean by that is the main drawback is that there's a very high bar for scrutiny for a bank in a way that there's no other institution, no regular institution that really has to meet. So that high bar means it's more expensive. There's a lot more ongoing audits. There's a lot more going ongoing scrutiny, which makes it a lot more expensive to meet this bar. And in fact, one drawback that is unique to Anchorage, because we are the first federally charged bank, is the fact that we're the first. And being the first means that we're also finding things and having to explain things to regulators that were the first ones to encounter because there's no trail that has been blazed before. So blazing that trail is very rewarding on one hand, but on the other one, it is also extremely, extremely hard. These are very complex”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“And they do have analysts, and they analyze this as an individual investment the same way that they're analyzing an individual investment in a company. So this is part of their model is if something goes wrong with the blockchain that is critical, then that is effectively an investment that didn't achieve part of market fit, ran out of money. One of the many reasons why early stage investments fail.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Vulnerability on the blockchain. So ultimately, those are left in two big buckets, I would say. On one of them, Enchrage as a custodian and we own the private keys and we're focusododial. So Anchorage has exclusive access to the keys of the assets. And that's one of the requirements from the regulators for qualified custody. So possession and control of the asset. So we take responsibility for a lot of it, a lot of the end-to-end life cycle. Now, if the blockchain stops or if the blockchain has some critical bug, that to us is qualified as an investment risk. That is the due diligence of the investor that needs to inspect even though we do security audits for all these protocols and all these smart contracts, it's ultimately an investment call. It is the same thing as betting on a product that doesn't achieve product market fit. In this case, it's betting on the product that was fundamentally flawed for some reason. And remember that Anchorage does not serve retail. We are exclusively institutional. So institutions are very sophisticated.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“So there is insurance for assets, and in fact, Anchorage does have insurance. We have modeled our infrastructure. We have gone to all the insurers, the Aeons, the Marshes, the Lloyds of London, and we in fact insured the assets on the platform. So that is something that you have available today at Anchorage. Now, ultimately, you do have to realize that the insurance appetite is still growing. And so there's not enough insurance interest to actually cover for all of the assets that are currently on all of the different crypto platforms out there. But it is a big component in a component that, again, works like the traditional world. You have asset insurance and you have these large insurers actually making sure that things are covered in case of loss. Now, your question was a little bit more generic. What happens if something goes wrong? There's actually many ways of things going wrong in crypto that are unlike traditional assets. For example, what happens if a blockchain simply stops? Or what happens if there's code?”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dashboards and the ability of understanding which votes are in there. We've actually built at Anchorage a very interesting product which allows you to see what votes are going on, whether they're executive votes, whether they're polls, see the details behind them, links to the full change that is going to be enacted on chain if this is passed, shows you in real time, which is very interesting how the votes are going. So you can actually see in real time whether yes is winning or no is winning or abstention is winning, whatever it is. And we created a product in which from the safety of anchorage you can actually vote on the outcome of these networks. Now to address your question more specifically, you're absolutely right that on the long tail of assets Discord and Twitter, crypto Twitter is primarily the place where discussion is happening and what we've seen is that the crypto funds and the more bleeding edge funds that are deeply involved in crypto are on all these discords and are very active on Twitter and so they're going where the discussion is happening.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of the larger projects actually have some pretty sophisticated governments dashboards and governance mechanisms. And you're right that the Web3 phenomenon in general, so Web3 as a catch-all term for cryptoassets, cryptocurrencies, NFTs, all of these decentralized protocols as an umbrella term Web3, it's very common for Web3 protocols to have what you call decentralized autonomous organizations, so DAOs, and it's a set of collective people coming together, owning the asset and the percentage of asset that they own of the total diluted market cap is the percentage of vote that they have on the network. And so they vote on the outcome of what decisions should be made for the protocol. So all the future is decentralized, and that is where decentralization starts is from the government aspect down. So for large institutions, they primarily invest in the more sophisticated protocols and the ones that have been around for a long time. And those actually have some very sophisticated”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Many people trying to do financial products around the fact that these blockchains now generate return at X percentage basis per year. So very interesting modeling. The same way that I mentioned that you can't do lending if you don't own the custody stack and you can't do brokerage if you don't own the settlement custody stack. You can't do staking because staking comes from the same private key, same password that owns the assets. That is the password that defines which vote is being cast in what direction so that is ultimately also the ownership of the asset in the staking comes from the same exact place, which is the private key. So one more example as to why custody needed to be the first building block that we tackled and that we solved so then we could actually do other value added services on top.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have something to lose if you misbehave. If you misbehave, in theory, those assets could be taken away. It could be what are called slashed for misbehaving. And so that's kind of the principle. Moving from a proof of work, which is very high intensity from an energy expenditure perspective, to a model in which the ownership of assets is the thing that you put at stake and you get rewarded for doing so. But a lot of the staking returns are actually very high. High single digit and in some cases double digit returns. What that means is you can look at it two ways. It's one end it's returns. On the other one is dilution if you're not staking. So when you're staking, you're at par with the rest of the network because you're being rewarded like everybody else that is staking, but everybody that is not staking is currently being diluted, say, 20% a year. And so it forces you to engage in the governance and forces you to participate in the network. And it also creates a very interesting model for generating returns. In fact, there”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Staking is really interesting because it is a native way to generate return on the blockchain. So Ethereum is actually a proof of work blockchain that is very known, the second largest blockchain out there, that is about to actually move towards proof of stake. And what that means is that they're transitioning their consensus model from using miners in electricity in this mining, which are effectively solving very hard computational problems to ensure the consensus in the security of the network to a model in which you lock up some of your Ethereum and are rewarded for participating in the consensus. So the idea there is that you lock up some of your assets and you give them to certain servers and nodes on the network and those nodes participate. So process transactions and they ensure the safety of the network itself. And the reason why you do so is because by locking your asset.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Technology behind it is fundamentally different from traditional finance, but the businesses on top are not that different. And in fact, the way that Anchorage charges for these products and services is very typical, right? On the custody product is assets under custody, on the brokerage, is BIPS on a trade basis, we charge net interest for lending, percentage of staked gains. So these are very traditional financial services pricing models and very traditional services that are just built on a very different substrate and very different technological platform.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a very, very high level of responsibility and obviously a very high technical bar that you need to meet. And so we had to train our own talent, which is something that in traditional, if you're creating a fintech or if you're creating a brokerage business, you can find talent in the space. You can find people that have had experience, decades of experience. There was no such thing for us. There was no one with any experience. Everything had to be thought from first principles because it was just something new and brought up from the ground up. So in terms of training, that was something that was very unique. For some of these other more traditional businesses, say lending is a business in which risk management, the asset class is different. Of course, the modeling is different. The way that liquidation happens in the edge cases are different from a blockchain perspective. But in principle, the risk modeling, the collateralization ratios, the type of structures that you use, they're not that different. And so it's an interesting hybrid where the fundamental”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say that every single one of them has a different component. So, what it takes to be excellent at security is, well, number one, deep expertise with the types of systems that you need to engage with, deep expertise with hardware security modules, deep expertise with distributed systems, expertise then in fact is incredibly, incredibly hard to get. There's not that many of these types of engineers that have this crossover experience of hardware, distributed systems, and security. So when this phenomenon started, there was no one in blockchain with five years of blockchain experience that did not exist, right? The industry did not exist. And so you cannot hire anybody with experience, which has actually made us have to train people up. And it's very hard if you're not a security engineer, if you don't have two founders of a company that are just deep security engineers and deeply understand what this actually means and what the responsibility is of having billions and tens of billions of dollars of irrecoverable private”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“In each of these areas, so trading, governance, staking, financing, I'd be really curious, what does it take to be excellent in each of those for, say, Anchorage compared to your competitors in each of those areas?”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Voice heard, that would obviously be a very bad experience for you. So we had to build those features into every single asset that we support. And then after that, clients start coming to us and said, hey, Bitcoin is proof of work, but there's all these new networks that do this thing called proof of stake in which if we don't do something actively, we're actually being diluted 7% a year or 10% a year. And so can you support staking? And so we started supported staking. Same thing for lending. Anchorage, I have a billion dollars of crypto with you. Can't you borrow me 100 million dollars and I'll put a billion dollars of collateral? Of course. That sounds like sound business, massively over collateralized, liquid assets trade 24-7. Of course, we'll actually borrow dollars against cryptocolateral. So from day one, the evolution has been based on client demand and always built on this strong security foundation of custody for hundreds of assets.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why can't I trade from the safety of my custody? And so that brought us to our next product suite, which was really brokerage, the ability to buy and sell cryptoassets and aggregate liquidity. So today we have an RFQ system that aggregates over 25 different liquidity providers and really gives you best execution and best price because it aggregates all the liquidity. We're agency-based, so we're not doing prop trading against you. There's no conflicts of interest because we're not actually running an exchange and all of that gets settled onto the safety of the bank and of the security that you've already trusted. Then after that, clients came to us and said, custody is great, but there's all of these new assets that do these very complex things. Some of them I need to vote on. There's governance decisions that need to be made. So in the traditional world, that would be the equivalent of imagine that you could have a stock on your brokerage account, but you could actually not vote on these proxy votes, or you could actually not elect to make your vote.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“As an RAA, I need to use a qualified custodian, a third party qualified custodian. It's one of the rules that I have to meet. So can you help me be a regulated third-party qualified custodian and help meet my regulatory obligations? And that's what ultimately led us on the path to become the first nationally chartered bank. So we are regulated by the OCC and we're the only crypto bank that has this ability. And this charter is exactly the same charter that puts us on the same footing as all of these other big banks, like JPMorgan Chase and BNY Mellon, et cetera. So it's the same exact charter from the same exact regulator. So that was the ultimate conclusion of our path of serving our clients as an unambiguous third-party custodian, which did not exist until early 2021. Then clients went on and said, if I've already selected my custodian and I've deeply audited and it's deeply regulated and I trust the security”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've described in the beginning Anchorage started with custody. That was the main problem to be solved without owning private keys safely, there's nothing else in the business. So that was the main problem that we set out to solve, and we've done so for not just one asset, but hundreds of assets. The second component, and I think the view here is the majority of Anchorage business, if not all of it, has always been driven by client demand. Clients demanded a safe platform. And then after that, they said Anchorage, this is fantastic. I love your platform. But I'm an RIA.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“Increase the ability for us to detect any kind of misbehavior. All of those things are just a roadmap that you constantly deliver on and do constantly iterate on, that you constantly updating your mental model of how that should actually work.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's been many appraised. I think it's very fair to say that security has never finished product. Security really is a process. And that's something that anybody that works in security tells you it's kind of interesting because you're selling a product for security, but the reality is that your product is constantly evolving. The threats are constantly evolving. It's a very different product. An attacker model before the invasion of the Ukraine and after. You now have a different worldview over what security systems actually should be. And it's kind of fascinating how world events actually inform the architectural changes. From day one, we've had a very clear path on the evolution that we needed to go to. It's a very different security model that you have for a billion dollars that you need for a trillion dollars in crypto assets. And so we have a roadmap and we're on that roadmap. And every time we reach a different milestone, we ensure that all the things that we said we're going to do from a security perspective to augment it, to segregate it, to increase the transparency to”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source
“My decision to ensure that we had very, very, very high conviction, crypto conviction. So anybody that comes in, we need to make sure that they understand what crypto means and what the volatility means and what it's going to feel like once everybody in the media says that crypto is dead for the thousandth time. What does that actually feel like? You intellectually can reason through it, but it's very different to actually live through it. So you make sure that your teams have very high crypto conviction. And we've been lucky enough that through the past two bear markets, there has not been any kind of churn when there's a bear market because we've been able to self-select for people that are mission convicted about where we're going.”
2022-06-30 · Capital Allocators · Diogo Monica – Securing Crypto at Anchorage Digital (EP.259, Crypto for Institutions 2, EP.06) · IDENTIFIED FROM THE TRANSCRIPT · source