Money Code
The future of finance is digital. Welcome to Money Code, the show that decodes stablecoins and the evolution of programmable money for builders, investors, and decision-makers. Each week, join hosts Chuk Okpalugo, Author of Stablecoin Blueprint and Raj Parekh, Head of Payments/Stablecoins at Monad Foundation as they break down the systems and strategies of seasoned operators in the space, revealing the insights you need for better build and buy decisions.
Money Code
Building the Base Layer of Digital Money w/ Luca Prosperi (M0)
Presented by Stablecon Media and Powered by BVNK
In episode 4 of Money Code, we spoke with Luca Prosperi, CEO and Co-Founder of M0 — the stablecoin issuance protocol behind MetaMask USD and USD.AI, now surpassing $870 million in supply in aggregate.
We discussed how M0 is redefining the stablecoin stack: separating issuance from distribution, building a shared liquidity layer, and enabling any platform to “own its dollar” on non-custodial rails. Luca also shared how MetaMask USD came together with Bridge (Stripe), the philosophy behind M0’s reserve model, and what this shift means for Circle, Tether, and the broader market.
About Stablecon
Stablecon (https://stablecon.com/) is the premier gathering for those at the intersection of DeFi, economic policy, financial infrastructure, and institutional integration, and those reinventing global commerce.
By convening the brightest minds in fintech and crypto, Stablecon provides attendees with world class thought leadership and fosters unparalleled networking and strategic collaboration across the digital payments industry. Whether you’re building, advising, or navigating this new frontier, this is the room where it happens.
About BVNK
BVNK is the leading provider of stablecoin payments infrastructure, helping businesses move money faster, settle globally, and even launch their own stablecoin products. Head to https://bvnk.com/ to learn more.
Connect with the Hosts & Guest
Chuk Okpalugo: LinkedIn, X, stablecoinblueprint.com
Raj Parekh: LinkedIn, X, monad.xyz
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I don't think decentralized is the term of the next uh phase because what does decentralized mean? I think non-custodial is is the thing. If you have something that is wallet-centric, you cannot KYB a wallet. It's very difficult to KYB a wallet. How are you going to send money? Are you going to wire a bank deposit to a wallet? So I think that we need to create technology and infrastructure that is wallet-centric. We think the entirety of the business is going to go in that direction. But definitely today a MetaMask is going to be way more sensitive to those problems compared to an Amazon of this world, right? Where they can have some sort of accounts, they have an MTL, and the client doesn't really care.
Chuk Okpalugo:This is Money Code. It's a show where we decode stablecoins and programmable money so that you can better prepare for an on-chain future. I'm Chuck Ocpulugo, your hosts and author of Stablecoin Blueprint, and I'm here with my co-host, Raj Perek, head of stablecoins and payments at Monad.
Raj Parekh:How are you doing today, Raj? Doing fantastic. Uh we have a we have a great one today.
Chuk Okpalugo:Yes, today we're joined by Luca Prosperi, CEO and co-founder of the stablecoin issuance platform M0, that has recently crossed an aggregated market cap of $500 million. So super excited. And also a fun fact, uh me and Luca worked at the same place for a while back in London at Morgan Stanley. How are you doing today, Luca?
Luca Prosperi:Doing pretty good actually. We just crossed $750 million. Uh so you should keep the script updated.
Chuk Okpalugo:Yeah, that's rapid. That's amazing. That's the right, right traction. Uh, and excited to unpack that today and understand where all that growth is coming from. So um, before we dive in, uh just a quick note. Money code is brought to you by Stablecoin media and powered by BVNK. The views and opinions of the host and guests are their own and may not represent their companies. Nothing we discussed today constitutes investment advice or any other form of advice. Let's dive in. So, Luca, yes, 750 million people I don't think quite will understand the significance of that and how Allah's put together. So maybe we can start with just a quick quick intro of M0. What is M0 and what problem is it solving?
Luca Prosperi:So I I have this tendency of going to first principle all the time. So if I'm exaggerating in my answers, please guys stop me. But I think the way when we created M0, we launched M0 two and a half years ago, and most of the leadership comes from the stablecoin or digital finance space, right? From the MakerDAO project, the Circle USDC group of uh builders, et cetera. We started a company with a very strong conviction that stable coins or digital money, as we like to call it, is money's infrastructure, it's not a product. So we were used in the beginning of crypto that there were companies creating a digital money product like USDC, USDT, they could have been used in certain environments. But the reality is that money is infra, and is the infra that connects all the bits and pieces and the checks and balances that ensure that the balance you see on an application is actually there and can be moved freely and is a fair representation of the value. And we launched M0 exactly for that. So we wanted M0 to be the best, most composable, on-chain native digital money infrastructure. Uh connecting all the pieces that are required to issue, embed digital money in your stack, use it, move it, make it fungible, liquid, etc. And this has many as many facets, but it's an infrastructure project uh to start. So yeah, I mean I think that the project launched, we founded M0 at the beginning of 2023 when stable coins were absolutely not fashionable, but we were convinced we were the beginning of the most transformational paradigmatic shift of our lifetimes in finance. We raised $100 million of equity since then. Uh the company is roughly 50 people, mostly engineers. The world has waken up uh to stable coins, but in my opinion, it hasn't waken up at all. They are starting looking at the power of digital money to do certain narrow things, but uh digital money or stablecoin will swallow the entirety of bank deposits, the bank deposits framework as we know it. And I think that it's just the beginning of a very, very long and deep innovation that requires high quality infrastructure, and that's what we're working on at MZ0.
Raj Parekh:That's awesome. I mean, I'm curious, Luca, like one, why is the company called M0? And also like maybe go into your background, like what led you to down this, you know, this crazy rabbit hole that we call stable coins and what what prompted this, you know, you're spending all your time building this company out as well.
Luca Prosperi:Yeah, uh as people say, like you should connect the dot backwards, I think is absolute bullshit. Like you can connect whatever you want backwards. Uh my my life has been um, I mean, looking backwards makes everything makes sense, but when you're in the middle of it, a bit less. But I'm an economist, mathematician by background. I started my career consulting financial institutions at a company called Oliver Wyman. Went to business school at London Business School, joined the financial institutions group at Morgan Stanley as a banker for bankers. That's where me and Chuck met over these very long working days. And uh, and then I went on the buy side, investing in financial institutions. So I've done financial institutions all my life. And you know, the way financial institutions work as companies is very, very different, radically different from other companies. I stayed away from uh the so-called fintech revolution because for me it was a very sleek innovation of the front end, but the back end was the same. Like for every revolute, there was like an antiquated bank with APIs that were actually storing the money and just moving the money around. And DeFi summer changed everything for me. I mean, that summer changed everything for me for a couple of reasons. But for the first time, there were projects that probably uh unconsciously were trying to change how money is issued at the base layer. And I think MakerDAO was the most renowned of them all. Compound is another one, like lending markets. They were like first attempts to actually change from the bottom up the way you actually create money in the first place in a digitally native environment. And that's what I started to get very uh intrigued. And this coincided with like a very like uh critical point of my personal life. I'm um at the for the beginning of 2020, I was diagnosed with blood cancer in a completely unexpected way. I used to be a semi-professional athlete, very fit, wasn't feeling good. I thought I had this weird thing called COVID. They told me I didn't have COVID, but I had lymphoma, quite advanced. So I had to take six months off work, and um, they put me and my wife in isolation in a room for six months without seeing the light of the day, doing chemotherapy. So I had a lot of time to think. And I spent this time starting to research and publish some of the stuff that made me respected in DeFi uh through also a substack that I still publish called Dirt Roads. And then when you get out of those experiences, you can imagine, time takes a very different value. So I said I was kind of I was done working for other people in things where I had half conviction, I just wanted to do whatever I want in my life. And uh and that things accelerated. I started participating in Maker, creating like leading or co-leading the so-called real world asset program where Maker was the first protocol to connect with the world of real lenders, advising some of some of the funds that are now investors at M0. And then we launched M0 at the end of 2022. So things went pretty fast. What does MZ0 mean? Many things, right? We thought that M0 would have been the layer zero of money, so the base layer where you can actually create money use cases. So that is the first one. M0, as most people know, it's the narrowest definition of money, of money supply. So M0 is not bank deposits, it's not bank risk, but actually M0 is cash. Uh, and we wanted to create a digital representation of cash, not of bank deposits. And then we the the the first logo of M0 that now we actually have incorporated in the new version was an M power sign zero, because everything power zero is one. And so we wanted to we wanted to transmit this uh this sense of um of stability around around the one uh the Unity, the one pack of the M token.
Raj Parekh:Yeah, I mean that's that's super powerful. I mean, I appreciate you sharing the the backstory around that, Luca, as well. I mean, you know, obviously, like what we talked about in the beginning, like $750 million in circulating supply later. There's there's obviously been a lot of exciting announcements that you guys have also put forward. Talk about you know the MetaMask USD launch recently as well, and you know, what what that encapsulated for you guys. And also like we can maybe start to even break down like underneath the hood, like what you know, what M0 actually is. Like you guys are building like the the foundation of the new money supply. Maybe just take us through that journey of you know working with some incredible companies like a MetaMask also.
Luca Prosperi:Yeah, $750 million is not little money, but it's just the the beginning for us. Like we we have designed M0 as an infrastructure to intermediate hundreds of billions of dollars. So it makes us excited that the market is waking up to what we we actually wanted to build. And like we we created M0 based on a few pillars. The first one is the entirety of FinTech would have been built in the future on uh non-custodial rails. So if you had to build Revolut today, you will probably build it on non-custodial rails, not on APIs with Lloyd's DSB bank. The second one is what we call the upstream of money and the downstream of money are completely different markets. What do I mean with this? We see a lot of banks being excited to launch stable coins. Like you see, we see the announcements every day, like bank X, Bank Y wants to issue a stable coin. We think this is per se pretty irrelevant, right? Like nobody cares. Nobody will care who is the issuer of record of stable coins. Uh, what people care is the application they use to do cool stuff, right? In the same way, most people do not know who's the custodian under Robin Hood, or they do not know what is like the partner bank behind Revolut. And the guys, the application builders that build cool stuff on digital money and the issuers that do regulated issuance are completely different beasts. And with MZ0, we wanted to completely bifurcate this market. Uh, we wanted to give the ability to the builders to build an embed program, capture the yield of uh their own versions of stable coins only with code, without dealing with anything that was like it seems antiquated. And on the other side, we wanted issuers to be able to issue uh a token that could have been used across the whole network without creating their own use case. I think that 90% of the traditional banks that we see today will not cross the chasm and will not have enough distribution network actually to be successful in the digital age. If you're DJ Morgan, it's a different story. Like you have a market that you're capturing, but most of the others will struggle because exactly they don't have like a strong connection at the distribution level. We have very, very, very strong conviction about this, like bifurcating completely issuance and uh distribution and doing this with a layer in the middle that is a protocol. I think the example of a MetaMask is the quintessential example of the power what we want to do. So I don't know if everybody's familiar, but you know, MetaMask is probably the most famous wallet infrastructure company in the world. Like most of users in crypto, they started their crypto journey with MetaMask, which is a browser extension where you can manage your keys. De facto, you can manage your crypto assets. What people do not know is that MetaMask has around 40, I would say 30 to 40 million monthly active users. This is probably more than twice Coinbase, and has uh more than twice or three times the dollar deposit equivalent of Revolut sitting on their platform. Now, it's a non-custodial platform, but as you can imagine, they have a huge distribution with like the users. Now, they want to create an ecosystem that is a financial ecosystem around the wallet, like many others. And this starts with a few elements, the layer two linea that they launched in the same way Coinbase did with BASE. And also like a stablecoin that is fully tailored for their for their use cases. So they can bridge in between layers in a very smooth way, is fully integrated with their swap products, can incentivize the users, they own the keys of the contract, they can decide the compliance, they can decide who gets the underlying yield. So when we worked with MetaMask, so MetaMask is a very crypto-native tech savvy company. And MetaMask decided the consensus team decided to work with us to design this whole thing, right? So design the smart contracts, the compliance uh modules, the yield distribution engines, the connectivity with all the their products. And this is just the beginning, right? Now, the company required the issuance of the token in a US compliance manner because a lot of their clients are US uh based. They need to on-ramp from the US. Most probably the MetaMask dollar will power certain consumer-facing products that exist in the US for them. The issuance of the tokens, so the custody of the underlying assets and the issuance of the token to life uh was very important that uh had to be done in a US compliant manner. And so we decided to go to the Bridge Guys. Bridge is a company that's been required by Stripe, as many, many of you guys know. We have known Zach and the team for a long time, and we have a lot of respect for them. And so we suggested why don't we do it together, right? So, like you actually become an issuer de facto on the M0 network. It means that you care of the entirety of the off-chain part of the stack, which in my opinion would become more and more obsolete with time, also, like will become more advanced with time, like the way you cast three the assets, et cetera. But bridge is taking care of the custody of the assets, is doing the compliance last resort defense according to the law. They have the required licensing and they are minting the MetaMask token through MZ0 infrastructure. And in doing this, they're using on the off-chain side the entirety of the stack is Bridge. On the on-chain side, the entirety of the stack is M0. And I think this gives the ability to MetaMask to be to have a fully digitally native experience, to program the dollars the way they want, and to be abstracted away from the off-chain issuance. And on the other side, it allows a company like Bridge to operate with a non-custodial partner in a simpler way. So I think this is we just launched, like the MetaMask dollar went live last week with around $65 million of float, is obviously just the beginning. There are a lot of like plans around it. But this is very exciting for us. And I think that the beauty is any other instance of stablecoin we power with MZO is based on the same base layer protocol. It doesn't fragment liquidity, it doesn't fragment interoperability, uses the same set of contract that can be programmed and personalized downstream without recreating a completely separate vertical stack, which is very important. Like, you know, issuance and custody and solvency in money is important, but the most important thing in money is interop and liquidity. And this is what we want to power.
Chuk Okpalugo:Maybe we can talk a bit more about that, because I think that is one of the of the many novel things that M0 does and as a protocol and as an issuance platform. That shared liquidity layer I think is critical. And so maybe we can unpack that for the audience a bit on how it works and how you envisage it working. You mentioned on the one hand, in terms of the issuance of stablecoins, that stack, you've got the entity that touches the real world, the actual treasuries or underlying assets in a bank or in a security account, or in eventually, hopefully that's all on chain two. Then you've got the end application, in this case, MetaMask with the MetaMask stablecoin, and they can configure it and make it optimize it for their application. Then there's this layer in the in between. And so, you know, in one world, MetaMask could have launched their own stablecoin, found a partner and done it without this M0 layer. But because they are built on M0, they then get the power of M. And the vision for that is that's where all the liquidity will be. Lots of M zero powered stablecoins will be interoperable with each other. And when we think about decentralized exchanges and DeFi, M will be the token that people will add more and more liquidity to. And then all of these extensions of M, MetaMask token being one of them, can take advantage of that liquidity. Is that how you see it? And how does it work?
Luca Prosperi:Yes, obviously, in reality, the things are a bit more complex, but is is exactly that. I think that the way that we envisage the M0 infrastructure is a many-to-one to many infrastructure. So imagine you have you can have many issuers that have permission to issue the same token, which is the same digital representation M, which is like a novel money market instrument, you can say. And then this M token can be then extended, as we say, uh so personalized, uh, in many different stable coins that have the same properties. That means that all the interoperability network across chains, all the uh on and off ramping, so the interoperability between the fiat system and the digital system, and the liquidity network can be built around the single asset M rather than at the spoke level. Now, in reality, it's probably gonna be a combination, right? You will have like an H-and-spoke model where you have a core of liquidity at the M level and you have some like local liquidity sitting at the extension level that actually is easily accessible. But this so-called liquidity delivery network is one of the things we are working on the most at M0. So today, for example, we have with our balance sheet and some partners' balance sheet, we have bootstrapped pools on-chain for on-chain liquidity of mass dollar, MUSD against USDC, for example, on Linea, or M against USDC on mainnet, on Arbitrum. We have pools on Arbitrum, pools on mainnet, pools on Solana. And the idea is that everybody can go back to the base, to the base asset and swap the base asset for another M0 power stable coin without price discovery, or outside of the M zero environment using the core liquidity that is built around this white-labeled wholesale asset behind the scenes. Now, obviously, these things is complicated because you have regulated parties, you have multi-jurisdictional players, you have certain parties that have certain requirements, so that we expect this so-called liquidity delivery network to become more and more sophisticated with time. There will be permission wrapping, permission unwrapping, there will be permission pools of liquidity that only market makers can access, some sort of intent-based order book that can allow the liquidity. So I think that creating this liquidity network is going to be a big, big part of our job. Because unfortunately, the world is not as pure as DeFi wants it, where you have like a pool with like a billion dollars and people can just stop in and out permissionlessly. But the idea is exactly this: like the idea is to actually be instead of like internalizing in a company most of the stuff, and let's say I'm a market maker and you send me the tokens and I will do my own magics, or I am a company, like most of this traditional issuers. We want to create infrastructure that is out there in the open on-chain to actually operate all those building blocks and also connect with lending markets or other types of decentralized exchanges that other people build. So we are really on-chain focused as an infra. We think that the issuers on the M0 Network should be super light businesses. And as you were alluding to, Chuck, I think that the issuers themselves, we think that in the medium term will ultimately become a set of smart contracts where the digital native securities live and a licensing wrapper. But most of the fun, most of the interoperability, the swapping, the liquidity will exist in DeFi. It's not a DeFi we're used to. It's gonna be a DeFi 2.0 that is more institutional friendly, it's a bit more sophisticated, but that's that's what we're building. It seems basic, but the intuition is very powerful because, like, when you have vertically separate stablecoin stacks, the success of everyone is actually the worst enemy of the next one because you keep fragmenting liquidity and it's always more and more difficult to launch something else. The idea of MZ is actually of an accretive network. Every point that comes to the networks is actually increasing the liquidity of every partner because now every partner can access that entry and exit point for their own uses. Ironically, it is what Circle wanted to do at the beginning with a center consortium that they didn't manage to do. And as most people know, the head of strategy at M0 and uh uh one of the most precious persons in the company and one of the most underrated people in crypto ever is Joao Reginato, who built USDC at Circle and is the granddaddy of stablecoins.
Raj Parekh:Joao's the man.
Luca Prosperi:He's really the man. And also ironically, is what how traditional finance works today, right? You have many commercial banks, and then the commercial banks access a centralized liquidity facility behind the scenes at the central bank level when they need to move money around. So we are we are not trying to reinvent the wheel, we're just trying to perfect it.
Raj Parekh:Yeah, I think there's there's so many layers here, but maybe one thing that if you can dive a level deeper also is on how like reserves are managed. So obviously, like we know with stable coins that you know, typically there's like some type of US Treasury instrument that's behind the scenes that's powering it. When you're thinking about building an on-chain protocol and mechanism like M0, how are you thinking about reserve management and treasury? And you know, what types of assets are you guys accumulating to then help better tokenize these assets to give it that one-to-one value as well?
Luca Prosperi:Yeah, on this, we are similar to others, but also radically different. Similar to others in the sense that for us, also we publish at the foundation level so-called adopted guidance uh on how uh the reserving of the tokens should be done across the network. And currently it's only US treasuries under six months of residual maturity. Uh, so we we do not allow bank deposits, we do not allow other stable coins as part of the collateral pool, just US Treasuries under six months of residual maturity. This is also why we finally are in the US, right? Funny enough, we didn't come to the US beyond the obvious anti-crypto stance of the previous administration. And I mean, I'm absolutely apolitical, but that's everybody knows this to be the truth. The reason is that, and the reason why we are not in Europe is that the European MICA regulator and the former US guidance was actually not good enough to satisfy our requirements for issuance. If you go in under MICA, they will you will be required to keep 30 to 60 percent of your reserves in unsecured bank deposits. Now, why would I do it? I don't get money for it, I get bank risk for it. The banks, of course, love it because they got a massive source of deposits, but sorry, but this is not like uh uh on my dead body. As we know, the the the US with the genius bill took a completely different stance, and we also participated in the drafting with our opinions, where you can actually issue uh a stable coin that is fully collateralized by treasury-like deposits without intermediation of banks. This is very good for the consumer, it's it's super safe for the consumer vis-a-vis bank deposit, is obviously less good for the bank because now they need to compete with a much safer, much more technologically savvy product. But this is Darwin, this is Darwin, guys. Exactly. So this is the requirements now. So we require issuers on the network, and we currently have two, right? Like we have an issuer that we have bootstrapped uh in the BVI is an offshore issuer called MXON, and we have Bridge Stripe as an issue on the right on the network. We will have more, but we will not have hundreds. Um, every issuer on the network is required to be licensed in the jurisdiction they operate. So obviously they have some sort of regulatory oversight. But at the same time, we are we have additional requirements. So what we ask, for example, in the case of the MetaMask dollar, bridge is custodying in a bankruptcy remote setup the reserves, the treasuries, but they are provide, they need to provide a proof for reserve that is signed by an external validator every 30 hours. So it's not not only the attestations every month or whenever they are required, but every 30 hours we require a proof for reserve. In the case of bridge, uh, we are actually using uh on-chain collateral that has been built with Superstate to as a reserve. So we can actually look at the validation of the on-chain collateral in real time. Uh so it is actually real-time attestation. If you go on dashboard.m0.org, you will see the real-time every 30 hours a snapshot of the reserves. What is a bit different compared to the others uh in M0? And this is a legacy of the maker times. In this, we think we are way more sophisticated than most of the other players. M0 is an accrual-based system. So let's say that you are a minter, you park $100 million of uh treasuries in a box, and you can mint up to, let's say, $99 million of M token because it's collateralized. Now, every second, the debt you have vis-a-vis the protocol, so the M token is accruing a negative interest rate, a so-called minter rate, in the same way you used to work in Maker in the Debt you create against the against Ether Bitcoin. Obviously, uh, as long as this minter rate is lower than the asset yield of the underlying reserves, you're always gonna be collateralized and you're always gonna make some margin, right? Which is a few basis points margin for the minter. That means that you don't need to do some medieval antiquated air dropping of cash at the end of the month or some weird stuff like, you know, we are working on uh accrual systems. That means that also for all the extensions that are built on the M token, they get the benefit of continuous yield streaming. So they can actually receive yield on a comp on a continuous basis, on a second-by-second accrual basis, and can decide whatever they do instead of being there drop the yield by a party. And uh and it simplifies the life a lot of issuers because like there is the protocol operates as some sort of centralized accounting system for the whole monetary supply. So on this, we are a bit different from the others. I think we are we learned from uh from the OGs of uh of decentralized decentralized money movements. But the quality of the reserve for us is needs to be pristine. The security of the reserves, the absence of counterpart in credit risk is of paramount importance. I don't think we need, I mean, we there is plenty of plenty of margins for us to make us all uh big and rich and happy, even if we do not insert any credit risk or asset risk at the reserve level for now.
Raj Parekh:Yeah, I mean, I think that's pretty powerful because at the same time you have pristine assets underneath the hood, you also reduce fragmentation. There's like a failure mode to stable coin issuance when you create a lot of fragmentation across the liquidity layer also. And so to your point, if you're able to maintain high quality and just like a shared liquidity layer, like it can actually let the money supply flourish pretty quickly. And then at the same time, too, like the it can leverage the properties of the internet where it can cascade, you know, borderless 24-7, all the different you know, pieces that we care about when it comes to the new digital age as well. So I think that's I think that's awesome. I think one thing that we've obviously seen over time, and it's not it wasn't really obvious maybe three years ago, but you know, you guys have a point of view of the world where uh there's gonna be many stablecoin issuers out there now. Uh before there was you know circle, Paxos, Tether, there's like the the big three, and then you have them just kind of leading the charge. And you've kind of alluded to this where you know there's different economic, you know, distribution plays that and that kind of come along with it. But you know, over time, you're now starting to see folks lean and look at look to M0 and say, we want to now issue our own stable coin. And even, you know, just recently, Cloudflare is now announcing net dollar and having their own stablecoin as well. Like, what what do you think is contributing to folks saying, wait, let's issue our own stable coin? You know, we actually want to own our own dollar as well. Like, what do you think is contributing to that? And like, where did you guys say, like, hey, we don't think the view of the world is gonna be just this big three? It's gonna be many folks having their own type of you know, stablecoin around it. Like, maybe if you can help like break that down even further, too.
Luca Prosperi:Uh yeah, I think that the way to describe the view of the world that we have at M0, I think it requires a bit of a rewiring. I don't think issuing your own stablecoin is what people really care about. People do not care about the issuance. People care what you mentioned afterwards. It's like they want to control the dollar that exists on their platform. Controlling also, first of all, starts from the economics. Why we have companies that are worth half a trillion dollars that are actually uh Tether is a different beast, right? Because Tether controls also their own distribution. That's why they're so profitable. But the idea is, in my opinion, every venue that is uh connected with tons of customers that move funds, they want to control the dollars that exist on their platform. Why would they leave so much money and so much control to a third party that is not really adding a lot of value? So rather than having many issues, many in the issuance business, that I think the moat is that you will see many distribution layer avenues or application layer players willing to control their own stable. Hyperliquid was the last one, like hyperliquid manages five to six billion dollars of USDC on the platform, they don't make any money out of it. They say, why do we need to leave this money to circle? Why don't we keep this money in the ecosystem? So for them, it's not about issuance, they don't care. It's about control. And um, in my opinion, also in the near future, at the customer level, we will stop discriminating the stable coins by their own brand, USDC, T B, whatever. I don't think there's gonna be the same way we don't this differentiate Barclays dollar, JP Morgan dollars, HSBC dollar on our Mobile apps, we just see dollars. And then the bank uh uses manages the infrastructure behind the scenes to ensure it and move it around. And I think it's gonna be the same. Users will see dollars, uh, will see balances on an applications, and the applications will like to control those balances and all the aspects of it by using infrastructure. And I think you will see a lot of infrastructure placed that allow those guys to do whatever they want with the dollar. They want to personalize it, control the yield, do whatever they want. The issuance, which is the bottom layer, is going to become mere custody business, single basis point business. In the same way, nobody cares today who are the custodians of securities, right? These are massive utility-like businesses, they store securities, they store databases, and uh and they just get like a few basis points for it. I think issuance is gonna look the same. And if you look at some of uh the issuance as a service traditional business today, if we talk about Paxos, bridge, agora, or uh agora is very small, but like, you know, like this kind of these kind of businesses, they're all operating. I don't know if it's public, but probably I my guess is probably between 10 and 30 basis points of margin. That's what they keep, right? To do the issuance. So, in my opinion, the the power is completely shifting at the distribution layer. Uh, these guys are the ones who want to control economics and behavior. There will be a ton of infrastructure placed that allow this uh interoperability and control of and programmability of the money. And the issuance layer, the issuance bedrock is gonna be just commodity custody. It's not gonna be anything sexy up to the point that part also becomes fully digitally native. In the same way, you don't need a custodian to keep BTC or ETH, you can actually have it in a multi-sig, in a smart contract. That part also is gonna become like that. And it's gonna get there pretty quickly, I believe. So I think that this idea of everybody wants to issue their own stable coin is actually a bit confusing. Everybody wants to control the money that is flowing on their platform. How they do it, they are agnostic to it. If they can stay away from regulated issuance in custody, they will be the happiest in the world. They don't want to do that business.
Chuk Okpalugo:Yeah. I I think that's a really nuanced but accurate way of putting it. And I think the hyperliquid bake-off, the open public kind of call for RFP was really visible and it helped people to see, okay, if you own the distribution, if you own the customers, the volumes, then that's where you see folks wanting to leverage that ownership of distribution to call the shots. However, I think there's a difference between wanting to control your own dollar and then actually controlling the your own dollar. And I think there's one thing to have a custodial platform kind of think about PayPal before stablecoins. You know, you have money transmitter licenses, you have dollars, you can invest them according to your MTLs and control your dollar in that sense. Now we're in a world of decentralization and non-custodial wallets, DEXs with open smart contracts. What type of features do you think some of these end applications need to have to have control of their dollar? For example, with Hyperliquid, yes, they can give the USDH ticker to one of the teams that won, but USDC is sitting at five to six billion. It's probably going to be like that for a while, not because Hyper Liquid blessed it or not, but because of liquidity, because of interoperability across chains. Lots of disparate parties are earning from the trading and the liquidity fees and so on. So um, what are those features that you see across the different extenders that kind of predict their success at growing their own dollar?
Luca Prosperi:Yeah, so first of all, I think bootstrapping something already on your rails or shifting five billion dollars of liquidity is a completely different story, right? I think that the hyperliquid, we have known the hyperliquid guys for a long time, and I think that at the time at the time we were not ready, but we are trying to pitch the same to others. If hyperliquid would have launched with most of the trading pairs on the canonical dollar, they would have succeeded. Uh, nobody would have used USDC. Now, to move five billion dollars of liquidity is complicated, right? Like you have market makers that are making markets, you need to incentivize them to move somewhere else. And in order to incentivize them, you need to pay them. There is enough money there uh to incentivize them, but I think as you suggested, it's gonna be a long process. Probably they need to incentivize them with some tokener drop, they need to incentivize them with some yield distribution, etc. So it's very hard. When you start, it's different. You know, the beauty of finance 3.0 or whatever we want to call the finance we live today is that it's very fast. You will see companies, massive juggernauts emerging in the span of two, three years. Like, you know, nobody cared about hyperliquid a year ago, two years ago, zero. And I think there are a lot of hyperliquid in the making today that we do not know. And I think that we want to work with those teams early to help them so that we can actually help them from the very beginning before the problem becomes macroscopic. And this is a problem, right? Because most of the products are the beginning uh a year ago were not interested. They were saying, yeah, yeah, we're doing a perp tax. We will do the prep tax first and then we will figure out how we do, how we manage our money. And then suddenly they have five billion dollars of deposits and now it's uh hundreds of millions of dollars of lost steel, then now they care. Uh, but the market is evolving, right? The market is evolving. It is quite clear that there are those that are trying to shift, and or even those that are not trying to shift away from USDC or USDT, they are going back to the issuer and they're asking for uh ill share. And they say, give me your money. And this is obviously the beginning, right? Like we have seen it, we have seen it at, I mean, I don't even know how many are public, how many are private, so I don't want to I don't want to mess it up because I know quite quite a few of those, but like there are a lot, there are a lot of those uh applications that are sitting over billions of dollars of stable coins and now have a deal with the issuer to get part of their cash. So uh I think the market is maturing on that side. But you're touching, Chuck, on a very important point, like the non-custodial economy. I don't think decentralized is the is the term of the next uh phase because what does decentralized mean? When is important, what is not? I think non-custodial is the thing. If you have something that is wallet-centric, you cannot KYB a wallet. It's very difficult to KYB a wallet. How are you going to send money? Are you gonna wire a bank deposit to a wallet? So I think that we need to create technology and infrastructure that is wallet-centric. I don't want to drop the like some AI-related comments because I know they can be very cringe, but obviously, if we're thinking about really going towards an agentic economy future, it's gonna be much easier for agents to spin up wallets and interact with wallets instead of bank accounts. So I think that the infrastructure we are building is uh geared towards that future, like um wallet-centric financial applications. So we think the entirety of the business is gonna go in that direction. But definitely today, a MetaMask is gonna be way more sensitive to those problems compared to an Amazon of this world, right? Where they can have some sort of accounts, they have an MTL and the client doesn't really care. It's much easier to create a company, a financial company on non-castodial rails. Anecdotally, uh, we created the MetaMask dollar and we launched the MetaMask dollar from the board decision to launch in six weeks. Nice. We both worked in banks.
Chuk Okpalugo:Right. That's incredibly impressive. And it it it really does. There's so many different aspects of stablecoins, and that's one of the ones that I like the most. And it's not necessarily a stablecoin thing, it's blockchains and wallets and infrastructure and open source. But the speed at which we're building new financial primitives and services is is just uh improving so much. And the cost to create these things is coming down, and therefore the frontier of what's possible keeps on expanding. And things and problems and solutions that were not prior possible are now possible. And so it's just really, really great for folks who are just impressed by the innovation and like to see new things get built and new problems get solved.
Luca Prosperi:Yeah, and on this, like this is how we are developing MZ like M Zero. We are working on some white glove integrations with very large partners that have very specific requirements, like MetaMask, but we are also developing uh almost self-served documentation-oriented platform where people that need stable coins to power their own use cases, they can launch it. And some of them get very big, right? Like the guys at uh USD AI, they created a uh synthetic bond that would have invested in um in the AI space for processing power, et cetera. And they wanted to accumulate liquidity in stable coin form and then use liquidity stable coin as some sort of like uh deposit book. And they built their own contracts on M0, they did it with us, and now they are they amassed half a billion dollars in uh two months. So the guys are super smart and super bright. You we could have said that from the very beginning, but you never know, right? And I think that like creating like low barriers for innovation for people and like if you want to build something that requires stablecoin to be powered, you can build it on M0, no question asked.
Chuk Okpalugo:Yeah, no, 100%. It's really kind of touching on the programmability of money and how you can just program and you can just with code create whatever you need. And that's one of the core reasons we call the show Money Code. Like it's it's just uh a really good example of the easier you make it to build something, the more that folks who have lots of different context and ideas can just come and build something that you can you never would have thought of. And you're saying, okay, great, that's a new solution to this problem that exists, fantastic. And it's best to build in an open way so that you don't have to invent every use case. Let the use cases come to you to use the tool because it's the best tool there. And as more and more people come together, in theory, the shared liquidity layer will build this like huge network effect where it just becomes the de facto obvious thing to do because that's where the liquidity is. So, one thing I actually wanted to ask, what does this mean for Circle and Tether? This is a thing that I I think about a lot. And I know those two are very different and they have different distribution across the world for different use cases. But as more and more entities that own their own distribution and own their customer, want to control their dollar, see these capabilities, see the options, and see that it's becoming a six-week process or even less to large term stable, then it seems like it circles room for expansion. Yes, the entire market is expanding. You know, there's a projection of three trillion by 2030. So there's still green space, but some of those areas are going to be taken by the individual entities that are building these applications.
Luca Prosperi:Yeah, I mean, I think uh you touched pretty much on all the points. I think that if you do not control distribution, uh margins are gonna get compressed quickly. They already got compressed very, very quickly. And you know, at MZ0, we started from the opposite. We started with a zero-margin business. Like we do not charge anybody anything at the and at the infrastructure level. We think that we can create some sort of spread for liquidity services that people can provide on the platform, but we started by foregoing the entirety of the spread. Now, I think margins will compress if you do not control the distribution. Tether is a very in a very unique position. They control the distribution. I don't think that the tether market will grow as fast as the other markets and digital money, but their market they control. Like people use USDT, they don't use the dollar. They care about USDT. They trust USDT more than USD. Uh so I think it's uh is a very powerful position to be and will allow them to be to keep very high margin for a long time, and that business is also morphing, etc. Tether is a bit of a very different beast. I think Circle is more is closer to what we do. And I think Circle isn't, I mean, on the one hand, is in a difficult position because they already have margins significantly eroded by their partnership with Coinbase, and you know, there are more and more large pockets of uh of stable coins in D5, for example, coming and asking for controlling their float. Uh so it's not it's not straightforward, but at the same time, this is a massive market, guys. I mean, it's uh as you said, that I mean I think this is gonna be this is going to be 20, 30, 40, 50x. There is enough space to create giga unicorns for the next two decades. And um definitely even for Circle is a great position to be. It's a very well-capitalized company, it's a public company with great great access to market. They can do MA, they can learn from their mistakes, they can expand their product suite, etc. Definitely you cannot predicate the next 10 years of Circle around one product that is USDC that has the same level of margins that the USDC had in previous five years, that the market is changing. The beauty of what we're focusing on on M0, the taking a more crypto native approach is that you can actually run a crypto-native blockchain native infrastructure with very low costs. Most of the costs at M0 are actually development costs. We don't need maintenance. There is no maintenance. Like, you know, our protocol is on mainnet. Uh, you don't need to maintain mainnet. So I think the cost income, uh, the cost income is gonna go massively down. Like we see this already with Tether, but I think in the same way it happens with AI, you can run companies, infrastructure, money infrastructure companies that manage hundreds of billions of dollars with probably 100-150 people. And they're gonna be entirely focused on security and uh development of new features rather than maintenance, uh, which is shocking. But this is where also most of the most of the profitability will come from.
Chuk Okpalugo:Yeah, that's the power of uh shared compute on the blockchain. It's um I could go into this even deeper, but want to take a pause here to thank our sponsors that make this show possible. Every business needs a stablecoin strategy. And if you're looking for the best place to start, that's BVNK. BVNK is the world's leading provider of stablecoin payments infrastructure, helping businesses move money faster, reach new markets, and even launch their own stablecoin products. Global licensing and compliance are covered, so you can build with confidence. Learn more at bvnk.com. Okay, thank you to our sponsors. There's a lot of large implications for just how a finance works, and particularly capital markets. I know there's a lot of buzz around the improvements on cross-border payments and other areas where there's just very different detached ledgers globally. Now, for capital markets, how do you see M0 playing a role and just this new base layer of money interacting with you know tokenized equities, private credit, and so on?
Luca Prosperi:That's a good question. I I don't know actually, because you know, capital markets, institutional markets are way more efficient uh than uh than people think, right? Like people always say, okay, we should definitely do FX uh based on stable coins. Yes, maybe, but FX is also the most liquid market in the world. Like to actually move the FX market into a new stack is uh is very, very complicated. So I think it's gonna take time. But you know, at M0 we are very agnostic. We think that any type of financial use case requires uh digital money and we want to play a role. I think there is gonna be a migration of activities from traditional asset and money management on crypto rails, but I think it's gonna be retail in nature first rather than institutional. It takes a while. You might actually see the emergence of new institutional players that are crypto native that trade other stuff. But I think that to move like the equity department of a bank of an investment bank on crypto rails is gonna take a very long time. They have their own dark pools, they have their own systems. It's it is they manage huge amounts of money is gonna take a while. But, you know, uh people say that we tend to underestimate what happens in the span of 10 years. So maybe we're gonna get there faster than where we expect. The fact that the regulator is uh more very crypto friendly these days uh in the US is probably gonna help because we need to have like digitally native issuance in order to move stuff on a new stack. But in my opinion, this is gonna be a bottom-up revolution. You will see a lot of like customer retail facing applications or not necessarily retail. Like, probably if you're creating an application that is geared towards the mass market, then the application builder will entirely build this on crypto rails. So as always, there will be rather than like many large incumbents crossing the chasm because they have too much to lose, you will see a lot of like new emerging leaders coming out of nowhere that you wouldn't expect. Right. Um I'm old enough to remember Revolut when Revolut was incubated at Google Campus in London, and they had a credit card for FX, and now they're one of the largest banks in the world, and Robin Hood was the same. Like it was a bit of a uh not a serious thing during COVID, and um the game stopped Saga and now is like one of the largest brokers, uh, if not the largest broker in the world. So I think that things change very, very fast.
Raj Parekh:Makes total sense. We've talked a lot about US dollars, but we haven't really touched on non-US dollars. Maybe you can share quickly like your thoughts. Like, what are the implications for like non-dollar currencies um and you know your expectations around it also?
Luca Prosperi:Yeah, so I think two conflicting forces. The first one is in favor of the US dollar, is as we move towards global markets where there is really a unified economy that is digitally native, there is no border, obviously, there is more of an incentive to gravitate around one single reference currency, right? This is like even compared to like 10 years ago. Like people in the crypto economy, they think dollars. Uh that's what most of the liquidity is, that's how they keep their money, that's how they invest, and it's good enough. The US administration has been very smart in incentivizing this because they realize that crypto is a new oil, is a new way actually to perpetuate the hegemony of the of the US dollar across the world. I mean, I'm European and it's it's pretty it's pretty depressing because Europe had five years had started to do it, and instead they're still fighting with their own regulator, but that's what we became. On the other side, I think that going back to what the the way I see money, in my opinion, money is infra. And most of the large uh economies, they operate in local currency terms. Like even like I spend a lot of time, a lot of a big part of the year in Brazil. My wife is Brazilian, so we have a place there. And people always give us this story that Latin American markets they love stable coins because they want to run away from inflation. Not true. Like, you know, 90% of the Brazilian economy, which is probably the sixth, seventh largest economy in the world, doesn't care at all about the dollars. They spend Brazilian reais, they save in realis, they think in realise, and that's it. So the idea that having if stable coins are way more efficient, way more efficient infrastructure to build financial services, then we will start seeing in large economies financial services being built on digital rails from the bottom up. So, like we see, like in Brazil, for example, local currency projects emerging. We are seeing this in Mexico in economies that are large enough. So I think there is gonna be there is gonna be an emergence of um local currency denominated uh digital money rails. Because it's just like infrastructure, it's better infrastructure. Uh, at the same time, the dollar, when we think about global movements and global trading, the dollar is still gonna dominate the space. But I'm expecting a lot of activity in local currency, local currency stablecoin for uh for large and tax-heavy markets like like Brazil, like India, like Mexico, like um countries in Southeast Asia, probably like Indonesia, Thailand, and Japan also is like is very active. Korea is very active. So it's just better infra. And we will run whatever denomination on better infra.
Chuk Okpalugo:I guess is the M0 protocol extendable to other currencies on the same M or would it be like a No, would have been a would have been a different deployment, exactly.
Luca Prosperi:Would have been a different deployment, but the governance of the protocol, the smart contracts of the protocol, uh can be redeployed uh based on a different denomination.
Chuk Okpalugo:Right. So I guess the end game. So therefore, as all the other different currencies get to the same level of maturity and have the same proliferation and problem of uh interoperability, then there's a solution. And so just as we close out the show here, Luca, we're gonna ask just a couple of quick fire questions. So starting with something that's close to this conversation, if we project out five years from now, what does success look like for M0?
Luca Prosperi:I think that we are in this in the moment now where we just want to keep doing what we're doing. But to make it short, I think in five in five years, I think M0 should be intermediating like you know, ten billion dollar plus of uh of uh stablecoin liquidity, if not more. But let's stay humble and uh and just keep building great infrastructure. So not fold into some sort of centralized company for the sake of like a quick profit maximization, but build very cool infrastructure. So hundred, hundred, under fifty people uh in a couple of uh places in the world and or spread around for the rest, ten billion dollars plus of issuance and uh powering some of the best, uh the most exciting innovations in finance in the world.
Chuk Okpalugo:Awesome, exciting. We know you write and you produce a lot of content yourself. But what about content that you consume? Do you have a favorite book, movie, or TV show that you'd recommend?
Luca Prosperi:I I typically read very crossover, but there is one thing, especially for people that are also building companies, that I I definitely recommend. I'm I'm a mountain runner. I do I spend a lot of time on the trails, a lot of crazy time, like days uh non-stop on trails. But I usually run on Saturday and Sunday, like long, long sessions, like five, six hours. And I always listen to this podcast called Founders.
Chuk Okpalugo:David Senra? David Senra, exactly.
Luca Prosperi:I love it. And I think that anybody who's building a company uh should listen to that.
Chuk Okpalugo:I'm gonna add it to my list. And then finally, who else in the space do you admire that we should bring on the show?
Luca Prosperi:There are many. I think that I I mean Joao is one of the person I admire the most uh at M0 and you guys know him very well, Raj especially. I think he's one of the most knowledgeable people in stablecoin space, period. He's an OG. He's an OG. He's an OG. I admire the two founders, the two founders of the two large uh lending markets, both Michael and uh Paul from Morpho and uh and Euler. Umid, who is uh thought thought leader professor at uh Columbia University, very outspoken person in crypto that I always talking to. Exactly. Some great investors. Uh Stefan Cohen is an investor in Bain. Uh Bane is an investor at MZ0.
Raj Parekh:I feel like Luca just helped us with our rest of our lineup here. No, these are great. I think we're good. I think we're good for the rest of the season, Luca. These are awesome, awesome suggestions.
Luca Prosperi:There are a lot of smart people here.
Chuk Okpalugo:That's awesome. No, this has been really fun. Uh loved getting to chat with you on M0 and going deep in thinking about how you think about the future. Uh and so thank you for the great conversation. And uh, where can listeners go to find out more about you and M0?
Luca Prosperi:So I exist on Twitter on Luca Prospery is my handle. Unfortunately, also LinkedIn. I'm not as active on LinkedIn. Uh as you guys were mentioning, I I have a SAPSAC. I still write on it every now and then. Uh more a bit deeper content, uh, but takes me a while to develop it called Dirtroads, so dirtroads.substack.com. And you can find everything about m0 at m0 is the handle on Twitter and m0.org on the website, uh especially focus on the docs.m0.org. Um our our website is really developer-oriented, so the documentation section is what we we we curate uh the hardest.
Chuk Okpalugo:Yeah, they're they are great docs. I I've come through them uh really well put together. Okay, Raj, what about you?
Raj Parekh:Yeah, you can find me on x at ragepark underscore and mana.xyz.
Chuk Okpalugo:And for me, stablecomplyprint.com, x at chuck underscore xyz, and on LinkedIn at ChuckOcapoligo. Thanks, Luca. This was awesome. Thanks so much for listening to Money Code. There was so much to take away from today's conversation. I learned a lot, and I hope you did too.
Raj Parekh:If you enjoyed this episode, do us a favor, share it with someone you know, or give us a five star rating on Apple, Spotify, or wherever you get your podcast from. Until next time.
