Stellar

Matt Kreiser (00:00)
Welcome everyone. I'm Matt Kreiser, Research Manager at Masari, joined by Jose Fernandez de Ponte, president of the Stellar Development Foundation. We're here talking about Stellar Q1 2026, an incredibly eventful quarter for Stellar, a leading layer one network. And it's been an eventful Q2 as well, Jose, with the DTC announcement last week, just announced that they will be bringing assets that they custody onto Stellar.

in twenty twenty seven I believe. Huge announcement. Let's lead with that. Welcome in.

Jose Fernandez Da Ponte (00:35)
Hello Matt, good to be here. Thank you for having us. As you were saying, it's been a really, really lively Q1 and a fantastic start of Q2, especially when you put it in context with the relatively choppy waters in in crypto markets in this year. as you were saying, we announced last week DTCC made an announcement. for those who are less familiar with them, DTCC is the depository trust and and clearing corporation in the US, which is basically the backbone and the infrastructure for all post trade.

settlement in the US. So you have ever traded a stock, the settlement has happened via DTCC and they moved four point seven quadrillion in transaction volume last year and around a more than a hundred trillion in in assets under custody. What they did last week is they announced that they will make tokenized assets that they hold in custody available on Stellar starting H one of twenty twenty-seven, which is massive news. It's the first open public permissionless blockchain that they're gonna be deploying.

on and is one of those symptoms of financial institutions jumping to feed into the on-chain world. And we have been talking about this for a long, long time, about Stellar being the institutional grade blockchain where the financial services happen. The DTCC announcement is another step in in that direction and a very, very relevant milestone.

Matt Kreiser (01:47)
Yeah, I think the big question that the crypto native listeners are gonna wonder is is this a represented asset or is this a distributed asset? Is this gonna have real use cases in DeFi? Is there any news you can give us, any visibility into that?

Jose Fernandez Da Ponte (02:03)
Well it's gonna be up to D T C C and and the issuers and and their members to decide which assets they want to deploy. But our point on beyond real world assets is that you really need them to be distributed. If they are just represented and they cannot interact and you cannot interact with them, then we're not doing a ton of change in on the ⁓ on the ecosystem. That's why if you look at what we have today, about two billion dollars in in assets that are on the stellar ledger, the vast majority of them are are moving around.

There are they are ⁓ money market funds, commodities, private credit funds, and the whole point of it is that it should be traceable, it should be ⁓ visible on the network, it should be auditable and it should be able to to move around.

Matt Kreiser (02:45)
Absolutely. And that ties into Stellar's Value Prop, which is real financial use cases for real people all around the world. So I'm really looking forward to that. Now, other aspects of the D T C news. I mean, this is something that we should keep talking about. What else? What else about it?

Jose Fernandez Da Ponte (03:00)
⁓ well there is I I think that the important thing is they have been working at that for a long, long time. You look at the digital assets team on the DTCC side, part of that team comes from Securrency, was a company that was acquired by DTCC a few years back. And that team had been working with ⁓ Stellar for a long time. And what they have said, which I believe is goes back to the essence of ⁓ Stellar, is the reasons why they ⁓ chose the the chain. They're talking about

risk management, compliance, openness. As you know, we are big proponents of open source software and permissionless chains. We think that it's incredibly important that chains continue to be open. ⁓ there might be other options. There might be permission chains, there might be chains that are more closely attached to one corporate actor. We think that for a healthy ecosystem it's extremely important that there is a public open option there and that institutions who are deploying they're gonna have really, really

high standards for what they want to do. And it's going to be different in terms of compliance, KYC requirements, how how easy they want to make those assets to move. The beauty of what the team has built at Stellar over the years is about that ability to have the primitives for compliance and risk management on the blockchain itself. And then the different actors that are going to deploy on them, they can configure that. This idea of configurable with compliance and risk management at the core.

And at the same time being open and permissionless, we think is a key differentiating factor for folks who want to build on Stellar.

Matt Kreiser (04:30)
Absolutely. Yeah. And to make it really clear, there's the native compliance features. So that's like a clawback feature. That's the T Rex Tokens for Regulated Exchange that's getting developed for RWAs to have interoperability with DEXs. And then that's really how the chains built itself from day one. And that's why I have the stellar consensus protocol and validators pulled up here. I think a big point of attraction for the DTCC, I can't speak for this, I wasn't in the conversations, was that

the consensus mechanism for Stellar. it's so credibly neutral that that's something that's attractive to them. So I don't know if you can talk a little bit about the way Stellar is architected, the way it's designed and how that can be attractive for institutions like the DTCC and then the institutions you might be issuing those assets that are custodied by the DTCC.

Jose Fernandez Da Ponte (05:18)
Of course. And and without getting a ton into the down the the rabbit hole of the consensus protocol itself, but Stellar operates on something called SCP, which is the Stellar Consensus Protocol, which is very different to the proof of work or proof of stake ⁓ blockchains that some of your members in your audience might be more familiar with. So the way that it works is validators join the network. There is no economic incentive to join. They're not receiving emissions, they're not receiving rewards.

They join because they have an interest in having a front roll seat of what's going in in in the system and being able to participate in the governance. And then when you start when you join the network and you start broadcasting transactions, it's super important to understand that first our validators are not anonymous. When you become a validator on the stellar chain, you need to say who you are. And those are institutions like Block Demon or Franklin Templeton and and others. Is is a it's a mix of more institutional folks and people coming

from the community, when you join and start to validate transactions, you pick what you we call your quorum slice, which is you define who's going to be validating your transactions. And then eventually over time it emerges as a quorum of core validators that are very, very important for that governance. But the fact that there is no proof of stake, that there is no proof of work means that like you cannot you cannot buy deciding power on the network.

Because it's not driven by capital. You need the community to trust you as someone who will be validating your transactions. There is no MEV MEV because the finality is instant. So there are a number of proprietors of the network that are there by design, were designed choices that were made twelve, thirteen, fourteen years ago with financial services in mind. I think that what many actors are seeing when they think about where do I deploy?

Usually we go to cost and transactions per second. There are a number of chains that will have low cost and transactions and high transactions per second. But this idea of I want validators who are not economically motivated, I want to make sure that there is not the ability to extract value from the mempool. I want to know who my validators are going to be, and I want to be able to decide who my validators are going to be, is very, very appealing on the institutional side.

Matt Kreiser (07:27)
what were the other major announcements that you've seen before we get into Q one twenty twenty six that have happened thus far in Q two that you want to touch on?

Jose Fernandez Da Ponte (07:37)
Well, if if you look at what has been happening, one of the things that maybe goes a little bit under the radar is our developer ecosystem. If you think of we we believe that we are the best blockchain for institutional great financial services, but we also believe that you need to have a very lively developer ⁓ side of the house. ⁓ slowly and constantly, Stellar has emerged as I think it's probably the fastest growing developer ecosystem of all layer ones now. You think about it, ⁓ in May we ha we reached ⁓ seventeen hundred.

Monthly active developers as per ⁓ Electric Capitals dashboard, which means that we are the fourth largest developer ecosystem ⁓ for blockchains. I mean we have more monthly active developers than folks like Arbitrum and Optimism and BAES and others. So it's extremely lively, it's extremely international. We are super proud of that and we will continue to be doing work there. The other thing that has happened in Q2 is that as you might remember, we reached two billion dollars in in RWA.

assets at the beginning of the quarter. We are now almost at three billion. I look at the numbers this morning, we are at 2.8 billion. We're going a long way from where we closed 2025, which was give or take around a hundred million. So we have done 3.5x in terms of RWAs on on the network ⁓ in just these five months. Depending on where you look at how you look at it, this means that we are either third or fourth, definitely in the top four chains for ⁓

RWA. And that has come from folks like Spico in France launching in the network in October and growing really, really quickly. It has come from growth in jill-bearing assets like USDY, from Mondo, YLDS from Figure came on the market as well. We are seeing a lot of regional growth. We announced also earlier in the year that Kenanga, which is a very large asset manager in Malaysia, was issuing tokenized funds on Stellar.

And then in addition to the RWAs, it's just innovation on the network itself. We push we push X ray, our latest protocol release with a very heavy emphasis on privacy. ⁓ you guys will be hearing a ton about privacy on Stellar, and there are some some actors who are already starting to do really cool stuff on on the application side. Neither mind just push their Stellar private playmates implementation. We think that both for

retail, but definitely on the institutional side, privacy is going to be a very relevant factor. And last not least, on the both institutional side, you might remember that we have the Marshall Islands deploying their stablecoin on Stellar. Last year, very recently the government of Bermuda announced that they're gonna be issuing their national digital dollar on Stellar they want to enable all the Bermuda economy on blockchain and

Is gonna be a part of that. And then we continue to do work with the names that you have heard, the US banks, the announcement we made last year, SockGen on the Euroback, stablecoin, State Street, Quivalits, All Unity, the Euroback stablecoin went live early in the second quarter as well. So there is a ton of activity, which is remarkable, especially in a context in which crypto markets have been going down. The fact that we grew TDL by

Forty nine percent on our DeFi ecosystem denominated in dollars, about thirty percent denominated in XLM. In a period where TVL for the industry went down about what, twenty five, thirty percent, signals a little bit I wouldn't say a decoupling because it's not a decoupling, but definitely we are outperforming the market on the second.

Matt Kreiser (10:57)
Definitely. And and I just brought up your your note here in the Q one twenty twenty six call. And all of those are great examples because you really frame it as when you collapse all these things, the stable coin, the RWA, the technical development, it's all for that real world financial use case. So everything wraps together and we can jump into it right now. Let's go one by one. I think we can start with RWAs. huge growth, like you said,

91% quarter over quarter growth in q one to one point five two now you're at three billion. We saw the growth with Spike, with Honda's USDY, my question for you is Are we looking at

we grew another billion because we have more US Treasuries, or are we looking at a a new type of mix? What can people expect in the coming quarter and coming year on the mix of RWAs on Stellar?

Jose Fernandez Da Ponte (11:48)
I think that you're gonna see who knows, the pipeline is super exciting. But as you know, overall money market fans have led and in our protocol as well, I think that you will continue to see that. We see a ton of interest of assets that can behave as better on chain cash and and things that are tied to USD and providing a moderate yield. So I expect that we will continue to see money market fund growth.

We will see money market funds that are not denominated in USD. I think that we are starting to see SPECO is a good example on providing yield on euro and and other currencies. And from the work that we are doing in places like Latin America and Southeast Asia, I think there's definitely an appetite, both for stables and RWAs that are denominated in local currency. So I think that's that's an avenue of growth. You'll continue to see alternative investments. So

Private credit, we're seeing a continued interest in commodities. So I I believe that the mix is gonna be a little bit going in that direction. What is important that you see now is that there has to be a balance. The way we think of the market is we think about RWAs, stablecoin volume, DeFi. All those things reinforce each other. So it's very important that we have balance growth there. We have been leading with RWAs, but if you look at our stablecoin growth numbers,

They are accelerating and part of that is a consequence of more assets on the network and DeFi has been growing as well. Because all that thing is is a loop. If the assets are not moving, we were talking about distributed versus represented earlier. If the assets move, that's gonna drive growth in stable coins as as because they need a settlement asset, and there's gonna be more assets to be used as collateral in DeFi or or as distribution. So I think that that's you're getting not only on the mix in the portfolio, but also on the uses of

those assets that that generates that virtuous cycle. The other thing that's going to be very, important in in RWAs is not only the size and the composition. Increasingly when we are talking to asset issuers, they're moving very quickly from feasibility, which is, hey, can I deploy this fund on chain and on which chain should I deploy it? to distribution, which is how do I get this asset in the hands of the users? Because just moving things on chain for the sake of being on chain doesn't help a whole lot.

The debate in the industry is this attracting new funds into the new new money into this ecosystem? Is just translation from off-chain into on-chain. And how do you enable that distribution? Because the the next wave is gonna be about some of the issuers who have not been there yet but are moving in, but especially about the broker dealers and the IRAs and the warehouses and all the infrastructure that you need to be able to push these assets into the hands of retail on the one side.

but also treasuries and and CFOs and and broker deals. So I would expect that what you will see in our ecosystem this year and we will start to talk about that more, is not only the next asset manager and the next asset issuer that is deploying on chain, it's how we're building the pipes for those assets to get into real users for real use cases.

Matt Kreiser (14:41)
Absolutely. And a key aspect of that for Stellar, you know, Stellar can be labeled sometimes more broadly from its history as, a very enterprise focused chain, but not crypto native. But an area where I think that myth's really dispelled is you're leading on DeFi composability for RWAs. So what that means is that people can actually use these RWAs. It's not I log into Fidelity and it says it's an RWA, but I can't do anything with it. Stellar's leading in actually

native crypto users being able to use RWAs and just ordinary people, you can buy a US Treasury, you can deposit it on a lending and borrowing protocol. you're partnering with protocols like Centrifuge that are wrapping existing tokenized securities that might have regulation to allow full access for other users. So there's a regulatory arbitrage there. at the same time you're building the trust with major institutions like the DTCC. So

I see when you say it has to be a balance, it's it's balancing well, Jose. It's really balancing well between these two things.

Jose Fernandez Da Ponte (15:41)
and it and it is it is very intentional. You see some of the wallets in our ecosystem, the Meru, DCAF as just two examples, who are starting to add GIL provisions for their customers that are powered by DeFi native protocols on Stellar. So you can see that composability. When Meru is providing GIL for the users that is being powered by Blend, which is one of the large DeFi protocols that are native to the Stellar ecosystem.

And we need to continue to do that. We saw recently also in this second quarter there was an announcement that we were not a part of, which is fantastic. It's great to see things that that are emerging organically between Tala, the the fintech that is very focused on microlending in the margin markets, and RTM, which is a big wallet used for payouts in the stellar ecosystem, where users of RTM are being able to receive loans for Tala that are denominated in USDC on stellar and push directly into the the stellar wallets at at RTM. So that composability

that sense that there is each Lego brick builds on the last one. composability and recursion are fundamental principles of computer science and we want to try to bring that to the ecosystem. Because in the end, it is very important that there is organic activity that happens there. And that idea that every piece has to be able to work with with the next one is one of the things that we believe that we can bring to the table.

Matt Kreiser (16:55)
Yeah. I love to hear that the applications are bringing that UI for users, even though my announcements here are focused on what's the technical development. we have the launch of Templar for RWAs to be borrowed and lent, and then we have token for regulated exchange, which is bringing, a permission to exchange for regular compliant tokens. But then I love to hear hey, these apps, they've got the good UI. The users, it's always back to the users, Jose.

Jose Fernandez Da Ponte (17:20)
Well, we've seen the movie many, many times. I think that in the end having good tech is extremely important, but in the end you're seeing in the sector that is evolving to where the winners are gonna be those who have the best relationship with the user, right? So there is a moment in which we're saying at the beginning, I don't know if having a transaction cost of zero point zero zero zero one is very different to having a transaction cost of zero zero one in the human driven cases. We'll talk about agentic in a bit, which might be different.

But that idea of how do you make it relevant for the end user and the end user is not only retail. I think that we are equally proud to see Monogram having their recipient wallet deployed on Stellar, as we are about DTCC making this available for the institutions. We have globally systemically important banks who are deploying on Stellar and we take that responsibility very, very seriously. But in the end, yes, if you don't have

a client that you're interacting with, then you're not in business and we want to provide infrastructure for those actors to be able to reach their clients.

Matt Kreiser (18:16)
So I'm gonna run through some metrics. Just bear with me here. And then I wanna get your take. They're gonna fit in with a lot of the narrative you said. First, stablecoin market cap onstellar up twenty two percent quarter over quarter. You can see the red here. That's euro CV. that's another Euro stable coin onstellar. So Jose talked about non-US stables as an area of growth. we'll come back to that, but

Jose Fernandez Da Ponte (18:19)
Yeah.

Matt Kreiser (18:40)
Market cap's been relatively flat, but like you said, it's not just market cap, it's activity. then we see in DeFi we were talking about Blend, that's the leading platform in terms of TVL, lend and borrow, Aquarius decks, Stellar Dex, that's the native built-in decks, LumenSwap, another decks, Templar, the RWA, lending and borrowing, Phoenix, another decks. and in Jose.

We talked about Blend and I think something interesting with Blend is with the problems that DeFi's faced with Ave obviously being affected by the exploit from Kelp Dow. we've seen Blend really lead in APY for USDC deposits, which obviously we just saw above that USDC's dominating in terms of TVL of stablecoin or just stable coin circulating supply on the network. So

Blend is a r a really notable platform. I guess we can just highlight those three things, get your thoughts and and start delving into the DeFi ecosystem a bit here.

Jose Fernandez Da Ponte (19:39)
Absolutely. and those numbers are relevant especially if you put them in the context of what's going on in the market. So the fact that our the stablecoin AOM and velocity is growing in an environment where year to date in most chains it's been growing but growing in the I think in the high single digital or the low teens and we are outpacing that and that we are growing our TBL in the market in a moment where different markets have taken a pretty severe hit, I think is quite remarkable.

So let's maybe take that one by one. You were you were talking about Eurobacked stable coins. obviously the vast majority of stablecoin volumes is still denominated in USD, and we we think that it's a ton of growth that is still coming on USD back stable coins. But we believe that eventually the mix in the stable coins will correlate or converge to the mix in the economy. If you look at

the the weight of usd on the global economy transactions is about forty percent. so at some point in time you're gonna see forty percent of stables be denominated in USD, sixty percent being local currency. Because if you want to go to those local and relevant use cases, those are gonna be denominated in local currencies. Currencies and economies will not be dollarized by stealth, by stable coins. So for this to be an important

instrument of payment in cross border flows, you will need a USD transaction to have a counterpart in Euro or any of the others. Those things will take different shapes. But I think the Euro back stable coins are are already pushing north of 700 million in in monthly volume, which is a good is a good sign.

And we see what's going on in places like Mexico where Etherfuse is tokenizing Mexican bonds that you can use as a way to have cheaper effects. So local currency is stablecoin, maybe it's one of the the most underrated things that is going on in the market now because people tend to say, Yeah, it's ninety seven percent USD based. Why should we care about local currency? And say, Well, five years ago we were not talking about USD stable coins, probably five years from now we will be talking about many, many

local currency denominated stables. So that's an important one. The blend piece is is quite relevant ⁓ as well. As we say, it's very important to have a balance between RWA stables and DeFi. You don't need to have double digit billions of dollars in TBL to be relevant. But it is important that we have first utility for XLMs who are very widely used on our DeFi ecosystem.

But also more and more of those RWAs are going to be used either as collateral for DeFi activity, or DeFi protocols are gonna be one of the ways in which those distributions make it to the market. Depth in liquidity is probably the most defining factor that you need to go after, and the DeFi ecosystem is a very, relevant part of it. We have been lucky to have blend in the ecosystem for many years, is fantastic and and they do a really good job.

You were talking about Templar and other people who are coming to the space. And we are doing a ton of work to make sure that there is an infrastructure where protocols can build without having to reinvent the wheel all over again. There is a whole infrastructure that has to do with bridges and oracles and cross-chain messaging protocols that you need to have available in your network for folks to be able to come and work on the DeFi side on us.

And we will continue to announce this year how we're making that infrastructure available for builders on the Stellar. And I know there were three things and I'm blanking on the third one, ⁓ which

Matt Kreiser (22:44)
No, I want to stop you because

I think we need to come back to stable coins, Jose. I think a really important question you mentioned the Marshall Islands stable coin. US Bank is testing custom issuance of its own stable coin. How do you think about these institutions onboarding, having discussions with them to have their own offering versus, already existing leading offerings like Circle?

Jose Fernandez Da Ponte (22:48)
Yes.

Yeah, the the one of the things that breaks your your brain a little bit on the stablecoin industry setup is I don't believe that stable coins are a natural monopoly or oligopoly. I don't believe there are gonna be two or three stable coins to rule them all. On the other side, minimum scale is relevant. I don't think that also that either that there's gonna be three hundred stable coins at those two hundred and three hundred million in in market cap that are relevant. So how do you balance that? Probably to make it

Into the league tables for the stable coins. I think there are maybe what, four or five assets that have more than five billion in AUM. And if you want to be in that league and be relevant because you need to build that liquidity, there are only a couple of strategies that have been proven to be successful. You either are very relevant in crypto markets, as USDC and USDT have proven to be, or if not, you need to bring your own volume. You need to be a large institution just doing a ton of settlement volume in fiat.

And who can deploy that and migrate that on the on chain side. So when you see people like

Western Union or PayPal, when you see the activity that Monogram is doing with the USDC, when you see a lot of the interest from existing banks, they tend to be less about, hey, we're gonna go really, really heavy into crypto native markets. It's more about we're gonna have the volume that we're doing on Fiat today, we're gonna do it bigger, better, faster, cheaper, because we're gonna move it on chain. I do believe that that's where you're gonna see a ton of the growth in institutional backed stables.

And to do that, we go back to when an institution is thinking about which chain they're going to deploy, what are they looking at? They're gonna be looking at the size of the ecosystem. They absolutely will be looking at that. They're gonna be looking at the technical primitives from security and and they're gonna be looking at things that are battle tested. There are only a few chains who have been in the market for long enough. Obviously I'm gonna be tooting my own horn here, but our protocol has been our chain has been around for more than twelve years. If you look at uptime, it's ninety nine point ninety nine percent, which means that the stellar network has been down.

for a grand total of 10 hours over eleven years. So that that's the type of resilience that that you need. But also they're gonna have stringent requirements on the ability to get their own risk framework and the risk program for KYC and anti-money laundering and counterterrorism financing. And they want to be able to build that on top of the blockchain that they choose. So going back to this ability of having compliance at the core

And the ability to make it configurable, that's something that gives a ton of peace of mind for the folks who are gonna be issuing the next batch of stable coins. And that's basically country neutral. it applies to a bank in the US like US Bank, it will apply to an institution who wants to deploy real bank stablecoin in in Brazil. Because the ability is that it's a little bit of mix and match. You can define your requirements and you can implement it there in a way that is not that easy to do in other chains.

By no means do we think that we're gonna be the only chain for stable coins. We just think that our chain works really, really well for

Matt Kreiser (25:51)
Yeah. And and quick question on the Marshall Islands front, is that really just a USDC wrapper behind it? Or is that something custom? And do you see a flood of Marshall Islands type situations? because you kind of talked about just framing there's going to be X amount that reach minimum liquidity, but there's also all these types of use cases where

they need to outsource that liquidity or have some sort of secondary finding for liquidity with the compliance and controls that they want, like the Marshall Islands. Where does that fit in?

Jose Fernandez Da Ponte (26:23)
Yeah, I I want to speak for the Marshall Islands in in the sense of the composition because I I know there are some details on on money market funds and and the like. So they will be better to talk to you about the underlying assets. Yeah, I do believe that you'll see that one of the ways in which you you're gonna get to that minimum scale is that they're gonna be a next generation of white level providers where you don't start from scratch. You know, what you see when some folks like

M0 is doing or the announcement of ⁓ POSD on POSDX, they're gonna be more of an ability to issue wide label stable coins that are built on top of an existing stable coin, so that volume accrues also to the to the asset that is backing the new release. And it's gonna be important to make it super interoperable. And I think that there's gonna be part of that is gonna be commonality on chains, part of that is gonna be better bridges and better bridge architecture.

And part of that is gonna be that some of those assets are gonna be Y-level versions of assets that are underlying that you just can move around. Because the key advantage, if you're not gonna have the hyper depth on cryptocapital markets, you will need to make sure that that liquidity is there because slippage and cost of going from one asset to the other is the defining factor for power users of stablecoins.

So you're not gonna get that super deep liquidity coming from crypto markets, you will need to build it in a way that is either because the underlying asset is the same and then it's very easy to move in and out instantly at a low cost, or that you have created that interprobability to make it that easy. So I I do think that you will see that some of those smaller cap stable coins are actually gonna be not wrappers but assets that that are backed by larger

market cap stables as opposed to going all the way to treasuries and repos and bank deposits.

Matt Kreiser (27:59)
Yeah, absolutely. you said for for every one of those meta points, we're building a real DeFi ecosystem. I just want to run through some of those. So Untangled Finance launched on Stellar in January, curated yield protocol, perp Dexes are coming to Stellar. We've got Noether, I honestly don't know how to pronounce that, noether, perp dex testnet, and then

Redstone Oracle launches in terms of infrastructure for DeFi, sushi swaps now on Stellar. we've got Vaults coming. We've got Other Fuse launching. You talked about non-USD, whether that's on the RWA front or the stable front, Other Fuse launching its Korean bonds in January, and then Normal's crypto index investment platform. And I think they also received an investment from the Stellar Development Foundation. So I don't know if there's any other specific areas, maybe PERPDEX,

That you want to touch on on D Fi forward looking, Jose?

Jose Fernandez Da Ponte (28:50)
PERPS are really important in in the sense of they get a ton of attention. As you're saying, there is no other is doing that work. One of the things that is super interesting to us in terms of the vibrancy of the developer ecosystem and the programs that are coming through the Stellar Community Fund, which is our mechanism to provide grants that are voted by the ecosystem. So basically the ecosystem decides I think no other might be the most advanced of them all, but I think that there are like five different

per Dex's that are teams that are working on something similar coming through the pipe. You spoke about redstone. I think that redstone is super important in the sense of tying it back to this ability to provide infrastructure that people can build on. And not only for redstone itself, but this ability to have oracles that are hardened that have been around for a long time and that quite frankly developers are also comfortable with and they can interact with

those sort of codes quickly as they're building the protocols and their applications. So I don't know where the DeFi market is gonna go. If you were had to ask me two years ago that we would be talking about perps as one of the most interesting things I wouldn't have fathom that. It's one of those where one of the mantras's developers tell us where to go. we're gonna follow the market. where they go that infrastructure layer and make sure that we have the best in class infrastructure for people to build on top of Stellar

is gonna important because developers are gonna go to the place where it's easy to build. and that's why it's so important to have Redstone but also the other Oracle producers to have people like Block Dem on the Hard First ⁓ in class best in class support for Stellar, all that a lot of the announcements that you're gonna see coming from us over the next months, they're gonna be definitely about people building and people deploying. But a lot of that is gonna be about the tools that are made available to people who want to build. They will say, yeah, I would love to

build on Stellar, but my wallet provider is X and X is not providing Sotobon support. We are making sure that all that is available and and that if you want to build on Stellar, you're not gonna have an issue because your infrastructure of choice is not providing the right support.

Matt Kreiser (30:38)
Yeah. And I appreciate you bring bringing up the Stellar Community Fund. We've got all that information in the Masari Q1 twenty twenty-six report. So make sure to check it out. you can just Google it or you'll find it on all the social platforms. It's got everything. It's got who's getting funded. It's got smart contract volume, which we've got on the screen right now. It's got DeFi TVL, RWA TVL, everything you'd possibly want to know about Stellar and the state of it. So that's why we're talking about this now.

we talked about the TVL mix, you talked about, hey, the stablecoin mix long-term, 40% USD, 60% ⁓ non-USD. Now, average daily smart contract volume, that's just defined as activities where there's token movement, payment, transfer, deposit, lend, just any type of use case where you're calling a smart contract on stellar. we see it dominated by USDC and XLM here.

Is it the same story that you said for stables where long term you see that moving in a different direction, or is there something notable here that stands out differently or it's kind of the same take?

Jose Fernandez Da Ponte (31:37)
I think it's the same take. If you look at the stable side of it, obviously USDC, I think the USDC dominance on the stellar chain now is probably about seventy percent. I would expect that to come down over time. but it is right now is the most used settlement mechanism that is on the network, which makes sense. it's a fantastic asset. we have others like ⁓ PSD, as you know, on Stellar, we have more and more USDY, Y L D S, there are other assets that

are coming, there is the local currency. Similar to the claim on infrastructure, we're gonna make sure that if you want to build them stellar, that there is not a blocker because the stable coin that you support is not available on the chain. So we wanna make sure that all relevant stable coins that people want to use, are available there. Again, the market votes with with their feet and when there is an asset that gets widespread adoption, we want to make sure that we can make it available to the folks who are building on top of us.

It just it just makes sense that from a smart contract perspective, USDC and XLM are the preeminent assets. right now we see in our DeFi ecosystem a lot of folks are using XLM as collateral, which we see as another good opportunity to bring utility at XLM. And if you look at DeFi ecosystems across chains, in most cases the native asset has a relevant position there because will go and and use it as as collateral.

And then you'll have the most widely used stables and and in our case for now USDC has that high level of liquidity and and growth. So they have been in our ecosystem for a long time, which is fantastic. We are seeing that growth on the Euroback and the others that we have been talking about as well.

Matt Kreiser (33:03)
Yeah. Now kind of flipping the script here. DeFi, that's something that Stellar's really built out since smart contracts came online a couple of years ago. Payments is something Stellar's led in for a long time. It's something that the SDF has heavily invested in. Let's take a look at payments similar story right now, USDC and XLM leading average daily transfer volume.

But I want to go beyond that the assets. We've talked about them twice now in different respects. but talk about what Stellar's doing in terms of applications, in terms of UI, where it's leading, how it's leading on that front, real users using Stellar for payments.

Jose Fernandez Da Ponte (33:41)
Yeah. If you look at payments volume in the network is about five billion give or take by by quarter. Sometimes as an industry, you you know the big numbers. So the there is about three hundred billion in in on asset center management on stable coins, not stellar only across the the whole spectrum of blockchains. And there are volumes that get thrown around about trillions in stablecoin volume and you know that those claims that there is more volume in stablecoins than on Visa MasterCard. That's a little bit

Apples to oranges, right? Because a lot of that is less payments volume and is more capital markets and and money movement in between exchanges. It is transfers indeed. So if you look at real payments activity, it's probably about let's say 10% of that. and the big big use cases where we are spending time right now are peer-to-peer transfers, and you see that as part of when Monogram is launching their

Matt Kreiser (34:14)
Yeah.

Jose Fernandez Da Ponte (34:27)
recipient wallet in Colombia and Salvador and other markets on Stellar, that's another step in that direction. We talk about RTM, we talk about all the wallets in emerging markets that are building on top of us, which we take really seriously. The other aspect is B2B payments, and you'll continue to see that. If you think of and again, that's how everything ties together. If you look at RWAs, the heaviest demand that we see for RWAs

are corporates in markets like Southeast Asia, where treasuries and CFOs want to hold something that is dollar denominated for yield and stability, but also because when they want to make a payment to a vendor outside of the region, it's very easy to move from a US money market fund to a US backed stable to make that cross-border payment. I expect that we're gonna see a lot more in that space. And then one that I didn't see coming, but it's definitely growing very fast.

Is a stablecoin funded card products. If you look at we have been talking for a long time of hey, we are not seeing B2C payments. We're seeing a ton of B2B, we are seeing that capital markets part, but we're not seeing a ton of B2C payments of people using stables to buy on e-commerce or buy at store. I think that we are still a little bit away of a few years away from massive adoption for that. You see the early innings, you see people like.

mesh who's doing a lot of work on B2C payments, connecting wallets and and then running them through Stellar. But for the everyday person who walks into a store, I think that we're still a few years away from the person being able to pull up their mobile phone, get a wallet, and pay with the stable coins directly at store. These stable coin backed card products are providing kind of a gateway product to that.

We have seen people like Yrex enabling products like that on Stellar. The growth of that vertical is probably about seventy percent year on year, you will have better numbers I than I do for for that. So we will continue to do that for for that part of everyday use cases. We're thinking basically of if you want three plus one, which is the B2B side, the B2C option on card stablecoin back.

Card products and then peer-to-peer. Those are the three. And the plus one is all the work that we do on the impact sector and with NGOs, with United Nations and the like. First, because it's the right thing to do. Second, because it's one of those places where disbursement of funds in places like Haiti or Syria is extremely difficult to do. We do it because it's the right thing to do. We recently announced work that has been going on in Haiti with some of our partners.

But also because by designing for extreme users, we figured out what are the conditions under which you will need to be able to move those payments. So that's where we're saying, we think that we need to right frame the volume of payments. And if of the three trillion or whatever is the number that happens on stable coins, you would argue that hey, maybe 10% of that is real payments, is those 300 billion. And you look at those three plus one places, you will get a very good sign of where we're putting out.

Matt Kreiser (37:13)
Yep. And I think it's really notable that Yrex is actually able to settle the payments on chain. I think that's that's a really cool technical development to me. Now the one part we haven't touched on yet is agentic payments. Stellar launched X four two on the network in March and the machine payments protocol in April, providing a catalyst for agentic payments that I think could drive a significant uptick.

not just in payments transactions, of course, right? You have machines doing transactions, there's going to be more payments, but I think volume could tick up as well from that. This is obviously something that a lot of chains are doing and now offering. But talk about the specific use case angle for Stellar with X402 and MPP.

Jose Fernandez Da Ponte (37:55)
Yep. So taking a step back on a Gentec, I I agree with you. I think that Agentic is gonna be a big driver of commerce in general, but specifically it's gonna be a big driver of stable coins for payments. Because one of the things that for a couple of aspects. When you're thinking about I'm gonna I'm gonna struggle. ⁓

my agent to go and buy this for me. The stablecoins are just a very, very good and wallets are a very good tool for that for the job. And the other is micropayments. we're thinking a lot of agentic payments in terms of agentic commerce, which is my agent going to Merchant X, Y, or G to do a purchase for me. The other aspect that is interesting that is difficult to envision until you see it in front of you is which new types of payment flows you can enable

with the stables that you could not enable. It's not only substitution, is is new payments volume. And things like for the creator economy, microblogging, the ability to charge cents for someone reading an article, the ability to play a game and pay by the minute, or watch a movie and pay by the minute, and the whole universe of machine to machine payments, those things are very, very difficult to make it work on the existing payment plumbing. for a number of reasons, but micro payments and speed is is one of those.

There is another one that has to do with throughput. If you look at transactions per second, you need to be able to do at least a thousand transactions per second to operate in payments. If you look at traditional fian payments, most of the payment service providers and payment companies on a steady state operate at, let's say, eight thousand, nine thousand transactions per second. And if you're operating at the peak, let's talk Black Friday volumes, maybe you're hitting twenty five thousand transactions per second.

Matt Kreiser (39:26)
Exactly.

Jose Fernandez Da Ponte (39:32)
The moment that you start to talk about agentic payments, you have a whole different problem, which is how do you create a race condition that can bring a site down? Think of it in the sense of you're a merchant, you have payments API that gets exposed, and all of a sudden you're gonna have millions of agents that could be hitting your API for very, very small payments. The infrastructure that those merchants have today does not sustain it. So when we are thinking about claims of how many

or use cases for things that might be hundreds of thousands of transactions per second or millions. You're gonna have things like the DTCC world where you're saying we we really are gonna handle trillions of transactions. But you also might see these environments for a Gentic, where having a high throughput way that runs on a blockchain to be able to do payments at that scale gets in exceedingly important. X402 and MPP are early steps in that direction and we are very supportive. We were very, very pleased that

Both the team and the ecosystem were able to have that deployed on Stellar super quickly. We expect that there are gonna be there's gonna be more of that. We talked about the privacy issue earlier. There's gonna be a whole construct around knowing your agent that is not solved, and and X402 and MPP are not solving that yet, but there are gonna be privacy solutions and and attribution of agent to a human on the back that is gonna be important.

And the other aspect that we think is gonna be important is there's gonna be a merchant SDK for a Gentic that is not gonna be built by the blockchain companies. It's very likely gonna be built by the acquirers and the PSPs. But where we are very interested that when that is built, that stellar is one of the options that merchants can use as part of that SDK.

Matt Kreiser (41:01)
Yeah. And and this is a time to finally tie in privacy x-ray, the upgrade that went live in January that's laying the groundwork for zero knowledge cryptography on Stellar, that's gonna offer private payments. How do you see private payments as a gateway for more payments activity on Stellar?

Jose Fernandez Da Ponte (41:21)
I think it's a prerequisite. So many of the cases that are institutional grade, both e commerce, corporate treasury, payouts to creators, definitely settlement of of securities. The actors who are intermediating those payments will want to make sure that there is the appropriate level of of privacy. we think that it's super important that blockchains stay transparent by default.

And that's why we are building our privacy features to be deployed at the application level and not on the core. We don't think that every transaction should be obfuscated. We think there is a level of transparency that is needed both for to earn the trust of the community and also for regulatory reasons. But we want to make sure that the entities who are gonna be powering those payments

can enable the the levels of privacy that we need. We talk about the stellar private payments. So there are going to be a few flavors of that. There are going to be cases in which hey we are okay with the wallets being public and just we need to and we're okay showing there was a transaction between those wallets, but we don't want to show the amount. There are going to be cases in which like in stellar private payments, there's going to be hey, we want to define a pool or an association of wallets that are going to be able to transact among themselves and

those transactions, neither the transactions nor the wallets are gonna be visible on the broad chain. But there is a set of view keys that for regulatory reasons or for oversight reasons, if you want to make sure that those transactions can be seen, you can still do that. So all that mix and match and tools is what we are making sure that people will be able to build on top of it. And if you look at what happened with X ray, some of the primitives that we are putting there is just to ensure

That people can continue to use what they're used to. So we are bringing the elliptic curves that builders on privacy applications are used to interact with. We are bringing bringing the hashing functions like Poseidon that people are used to, that they can use that on on the stellar side as well. And then let a thousand flowers bloom and make sure that the developers and and institutions can be modular on the way that they deploy privacy for their application.

Matt Kreiser (43:11)
Right. You just saying the words e-commerce to me just hit home for me like wow, it's gonna be crazy. This is what it must have been like ten years ago to see people just using a blockchain. It's gonna be crazy for me to see things like that, even if it's just seeing that the wallets had transactions, you don't know what the transactions were actually settling on a blockchain. It's gonna be really exciting to have those new use cases. So events, you had Stellar House.

Jose Fernandez Da Ponte (43:33)
Todo.

Matt Kreiser (43:36)
Mexico City. I think that was great at the end of April. Looking forward, we have Meridian, which is Stellar's annual conference. That's October twentieth to twenty ninth. Talk about that, Jose. the community a little bit right now. what can the community look forward to in the coming months and then looking back as well?

Jose Fernandez Da Ponte (43:51)
Yeah, we are making a very, very decided foray into international markets. we did two stellar houses last year, were New York and Miami. all the stellar houses that we're gonna do this year are international. We did Mexico a few weeks back. We're gonna do another one in Latin America over the summer that we're going to announce very quickly. And then we have a whole set of events on the road to Meridian in October.

even this week, we have a large event that is happening on the developer side in in Istanbul. One of the things that we've learned over the years, is that financial services don't travel well within countries because they are regulated industry and it's very difficult to just be sitting in San Francisco or sitting in New York, in your tower and deciding what is that is gonna work in Brazil or in Ghana or in Mexico. So we are doing more of those international events

and we are deploying people on the ground in those regions. in the last year we have deployed folks who are based now out of Mexico, Brazil, Spain, Germany, Denmark, Turkey, Ghana, Dubai, Singapore. And we're never gonna have an army of people. We're not gonna have twenty five people sitting in Dubai, at least in the foreseeable future. But those folks are our antennas to be able to first activate the ecosystem there.

But also to engage with the institutions and the regulators in those markets. and maybe different than other ecosystems, we are focusing on the one side on very single people who has been around traditional finance for long time, and also people who are coming from the ranks of the developer ecosystem and the stellar community who are now taking full-time roles with us. It's a combination of the landmark events like the meridians and the stellar houses. The Stellar House in Mexico was fascinating to me first.

level of energy, I think that we were expecting to have 70 to 80 people is usually for what we program Stellar House for, and we have 200 and change showing up. and also the combination of the die hard community who has been there working on Stellar for a long time, but a lot of new devs and Mexican fintechs who were showing and a relevant chunk of enterprises, regulators and former regulators. So seeing everyone there for

Two days in the same place was extremely revealing. It helps us a lot also to follow up from them. And there's a ton of large projects we are working on now in Mexico, who are a follow up of the star house activity. Because those institutions in those markets, when they're thinking about where they're going to deploy, the chain matters. It's not only cost and TPS. There's all those things that we talk about, modularity and risk and other things. But it's also they're gonna look around and say, is there a sense of permanence? If I have any if I'm building on something in this chain and I'm in

Brazil or in Guatemala. I'm gonna look around and the next person that I can reach out to is sitting in New York or in San Francisco. So that local presence is more and more important. and the events are part of that construct. It's not only that we do an event and then we fly out and you will never gonna see us again in two years. Is that you make those connections with our local teams and then we can take it from there and continue to build locally. Mexico's there, as I say, we're gonna do one in South America in August. We have a whole set of events in West Africa, Middle East.

and Europe as part of our road to meridian and then everything converges in late October in Lisbon, which I'm incredibly excited about as it gets closer and closer.

Matt Kreiser (46:49)
I'm excited as well. I plan to be there. And I agree. Going to crypto events in the United States versus outside of the United States, I do feel that convergence of regulators, developers, that palpable excitement. And it just makes me think back to what you said about, you know, forty percent USD, sixty percent non USD. I think that we've seen the excitement, the adoption, the attraction from

outside of the United States and I'm excited to see it represented on chain in coming quarters and years.

Jose Fernandez Da Ponte (47:16)
Yeah, agreed.

Matt Kreiser (47:18)
So I'm going to talk a little bit about financial analysis. I know that's not something for you as part of the SDF, but I think it's really notable in light of the DTCC announcement. Stellar closed Q1 with a $5.5 billion market cap for XLM, a price of roughly 17 cents. We've seen a big uptick towards 25 cents since the DTCC announcement. And I think that just goes to show that these things really can be catalysts

There's measured activity from them. It's also worth noting transaction fees coming down a lot. There were some upgrades that we don't have to dive into, but they did lower transaction fees, and Stellar Development Foundation really takes the view that lower transaction fees are good, but we can't have free transaction fees because then we get spam on the network. So it's a balance there. The last thing that I think is worth noting is in terms of TradFi.

we've seen this trend, Jose, of TradFry products launching. We've seen the green light for US spot ETFs for a number of crypto assets. We've seen Stellar in the last quarter get added to some indexes, to the wisdom tree physical stellar lumens ETP in Europe, these different ETPs in Europe, and then to the index for hash decks.

to include spot XLM, but we haven't seen, at least to my awareness, a US domiciled XLM spot ETF. Is that something we can look forward to? Do you have any insight there? Have you heard anything from TradFi in that regard?

Jose Fernandez Da Ponte (48:42)
nothing that I that I can disclose right now. As you were saying, there is a number of activity and assets that are that are that are available in Europe and some participation in those broader index, but nothing in specific that I can disclose at this moment.

Matt Kreiser (48:55)
got it. Well, I'll speak for myself as the analyst covering Stellar from Asari. I think that that is likely. and I'll be looking out for it Now just to conclude, Jose, the way I think about it is like what you said, we've got this barbell, we've got the enterprise institutional adoption, we have DeFi composability, we have privacy, we have these areas that crypto natives really value that Stellar is leading on.

I just think that Stellar's doing a really good job connecting those two areas to build out real world use cases. I'd like to see just how you frame it wrapping up, big picture, but that's how I see it and that's how I see the quarters ahead.

Jose Fernandez Da Ponte (49:32)
yeah, I I think that you you summarise it well. The way that we are looking we look at the universe is we wanna make sure that Stellar is the best blockchain that is institutional grade and built for financial services. Sometimes people believe that you need to choose that you are either gonna be serving institutions and then you need to be extra constrained, super permissioned, super corporate on one side, or that you're gonna be hardcore DeFi on the other side. We think that that's a fallacy. We think that when you build for financial service services primitives, you need to have both of those.

We want to be the chain that has the most global systemically important banks building on Stellar, the highest number of Forbes global two thousand companies bu building on Stellar, but also we want to be in the top three of the developer ecosystem and we want to be large on the DeFi side. We think that there is a way to do that, and especially we have a very religious belief that this has to be in a way that is open source and and permissionless and that you can set up a node and start validating transactions and broadcasting transactions. That's what we came to build.

we are not in the corporate chain or on the permission side of it and we think that it's incredibly important that that continues to be available. We think that it's a window for that institutional adoption and we'll continue to invest heavily to develop that ecosystem. twenty twenty six I believe is gonna be a very defining moment for us and I expect that we'll continue to have relevant news to sharing when we do this for Q three and and Q four. It should be a very good year.

Matt Kreiser (50:46)
Absolutely. Well again, congratulations on the D T C announcements. Huge news. ⁓ ground shaking in the crypto industry. And we've seen the price action to back it up. And really we've seen the adoption already leading up to it for why the DCCC might have made that choice. I think privacy, I think agentic payments, I think DeFi composability, I think yeah, that real world use of those RWAs, those are all huge catalysts that are gonna keep driving Stellar forward. So excited to see you next quarter.

Jose Fernandez Da Ponte (51:13)
Same here. Thank you so much, Matt, and thank you for having us.

Matt Kreiser (51:16)
Thanks.