The Exchanges

Q What are some of the other, like, applications of stablecoins that you're personally really excited about, or do you think builders might not recognize as great opportunities?

A Well, this is one where I, I think that there's an opportunity that runs counter to the narrative. Because there's a ton of excitement about dollar stablecoins, and I'm really excited about dollar stablecoins. I think there's so much more that we can do with them. But at the same time, you know, as I've talked to builders and as I've talked to regulators and businesses in countries around the world, so many of them have excitement about dollar stablecoins because they solve an immediate need. You know, if I have inflation in my country, I can now save in dollars and that that helps me, you know, have a more stable savings account or more stable business account. At the same time, when I talk to those folks, I think that there is an intuitive feeling of Oh man, we have our own local economy and we don't want that economy to be dollarized, right? Like if I'm in Kenya or Brazil or Nigeria or, you know, Indonesia, we have excitement about building our own local economy on the Brazilian real or the Nigerian Naira or, you know, that, you know, kind of excitement about investing in one's local economy. And then the, the, I think kind of intuitive feeling of, Ooh, there's this tension between getting the value from dollars, but also not having dollars dominate in a way where they crowd out the local economy. I think to me, that is one of the most exciting opportunities to kind of lean …

AI assessment note: “entrepreneurs in all those countries who are creating stable coins for their currencies”

Q How about for like US-centric builders, um, How should they think about the opportunities to build in stablecoins right now? And maybe a bit of a segue here, but I know that Coinbase just launched like a commerce payments protocol with Shopify. How does that tie into this and how does that create opportunities for founders in the space?

A Now that we have the fast chains, we have the, the scaled stablecoins, we have the mature regulatory environment, we have the easy to use wallets. I think the opportunity is basically looking at every single part of the financial system that exists today and figuring out how do we turn that from Legacy systems that in many cases are 50 to a hundred years old into programmable smart contracts that live on chain. And you can look at every part of the world and be like, wow, look at this system that is written in cobalt that, you know, has millions of lines of code that has all of this cruft that has massive fees. Can we write that into a smart contract that's 500 lines of code? And the answer is yes. It's literally yes. And this is exactly what we saw with Shopify. You're talking about, you know, this commerce payments protocol that we built. That lets, um, any Shopify store in the world accept USDC on base from anyone else in the world. And the thing that we did to unlock that was we embedded with the Shopify team and, you know, shout out to Toby and Shopify. They came to us and said, we think the moment is now for us to look at all of our existing acceptance systems and figure out how can they be rewritten in smart contracts. And what we did over a nine month period was exactly that. We went into their systems, which are literally millions of lines of code where they're doing t…

AI assessment note: “I think the opportunity is basically looking at every single part of the financial system”

Q Okay, Jesse, so AI had its sort of magic moment with the chat GBT launch. Do you feel like crypto is maybe going through its own ChatGPT moment right now?

A Candidly, no. And I think the reason I say no is because if you ask a friend or family member, I don't think they'd say, oh yeah, I have had a magic moment with crypto. I think instead they might be fearful. They might not actually know what crypto is doing on a day-to-day basis. And so the thing that's powerful about that is that that's the best time for us to be building and the best time for YC entrepreneurs to be trying to break through And the moment is now to break through because we've done the infrastructure work, the tools are in place, the stable coins, the chain, and now it's about putting it together into that magical experience that grows like wildfire across the world.

AI assessment note: “Candidly, no. And I think the reason I say no is because”

Q attention right now is AI, and we're just seeing all these magical AI companies building great products and growing really quickly. It seems like AI and crypto should be a very natural fit with each other. Um, so maybe can you talk a bit about that? Like, where do you see the opportunities for those two technologies intersecting, and maybe how does Coinbase think about the opportunities for founders there?

A I think it is a special thing that crypto and AI are growing up together right now. Because when you look at the problems that AI has, I think you can solve a bunch of them with With crypto. And, and two of them stand out to me. One is in a world where AI proliferates, um, it's gonna be really hard to know like what's real. And crypto provides a level of hardness and verification that I think can connect to AI in a way that solves that problem. Like if you have millions and millions and millions of things being created, being able to use crypto rails to authenticate them and verify them and say, hey, these things are connected. These things are real. I think that that's gonna be a huge unlock. The other one, which I, I think I'm maybe more excited about is that AI is about programmability. It's about enabling agents that at their core are computers and writing software and reading software and consuming software. And what better substrate for those agents to be operating on than money as software, right? If I'm an agent and I want to be sending money to other agents or transacting, I want to be using something that's natively built for me. And I think that's exactly what we're seeing happen with crypto right now is that crypto is plugging in as a platform. That enables agents to transact natively. So instead of going and trying to operate in a browser over the legacy rails, the…

AI assessment note: “crypto is plugging in as a platform. That enables agents to transact natively.”

Q So if we zoom out, like you could, stable coins are essentially just like one type of tokenization. Maybe could you explain what does that actually mean to sort of Tokenize something, and then are there other types of assets you're excited about seeing be tokenized and brought on chain?

A If you think about the existing financial system, um, you, you can kind of think about all of these large classes of assets, right? Stablecoins map to, uh, you know, fiat currencies, right? You have the dollar, you have the euro, you have the yen, you have, you know, hundreds of fiat currencies from all the countries around the world. That's obviously not the only class of assets. You also have stock. You have bonds. You have real estate. Uh, you have all of these complex debt structures. And all of that today, um, sits inside of the existing financial system, right? Maybe, uh, it's the, the, the stock certificates that sit with the DCCC. Uh, you know, it's, it's this whole world of records that map to financial assets that sit inside legacy systems. And so when we're talking about tokenization, I think one of the big swaths of tokenization, I think the one that most people think about when they're thinking about tokenization is basically how do we take all of those asset classes and move them out of the legacy books and records and into this new programmable environment? How do we move them from, ah, the, the, you know, records that maybe started a hundred years ago when we had the first stock certificates into smart contracts that live on base? And that is a massive opportunity. Right? Like, again, there's trillions and trillions of dollars of assets in the world. And I think…

AI assessment note: “take all of those asset classes and move them out of the legacy books”

Q that seems like it's a big catalyst for this particular moment in time for crypto, there's lots of news around, like, the Genius Act is going through, and you've got various bills trying to sort of regulate The crypto market. In what ways have you seen regulation hold people back from being able to like really innovate with crypto over the past few years? And how is that changing now?

A Yeah, well, I think this is something that really impacted startups of the type that are coming into YC and trying to be successful, you know, and I've been working with builders over the last, you know, five, six years to try and figure out how can I help them be successful building on chain? And the thing that has been really consistent is that So many early stage builders and late stage builders ended up spending like equivalent or more money on lawyers than they were on engineers. And you know, if you're coming into YC and you're interviewing and you're like, Hey, we're going to be spending more money on lawyers than engineers. Like my gut is that the YC partners are going to say, okay, like maybe you're not building in the right business here. Like really, are you as a three person team going to be able to be successful?

AI assessment note: “builders ended up spending like equivalent or more money on lawyers than they were on engineers”