Listen to our latest episode featuring Taler Finance and learn how the most forward-thinking asset managers are leveraging neutral, permissioned vault infrastructure to build compliant and automated strategies.
In this episode, Nertila from Trading Strategy discusses with Joel from Taler Finance. Taler Finance is a vault infrastructure for curated on-chain yield. It provides the smart contract framework that teams use to deploy, operate, and integrate non-custodial, curator-managed vaults.
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Transcript:
Welcome to tradingstrategy.ai, the podcast where you can learn more about the essentials of DeFi trading and new vaults. This is your go-to show for automated trading strategies and market insights. Welcome to the conversation, and this is your host, Nertila.
Nertila: Everybody, welcome to today's podcast of tradingstrategy.ei. Our guest for today is Joel from Taler Finance, and I want to say welcome. Thank you for joining me today's podcast. We are going to start with a little bit of introduction
Joel: Well, thank you so much for having me on, Nertila. I've been following Trading Strategy for a while. I've met your founders at a couple of conferences. I've been watching these podcasts. Really love what you guys are doing. yeah, glad to be here. And yeah, to answer your question, the way that I started my journey in the space, so I actually have a computer science background, so I studied my major in computer science, and then I was a software engineer very early in my career for about two years or so.
Joel: But I was always quite curious about the business side of things and figuring out tech-enabled business models. And so I made a decision to transition my career. I basically hung up my hoodie and, you know, exchanged it for a suit. So then I spent eight years across, Morgan Stanley and Accenture, and I was always kind of in the digital asset space.
Joel: So I looked at different use cases, that larger banks and, you know, different types of financial institutions were exploring, with this brand-new technology. So I did a lot on the asset management side, a lot around institutional strategy and crypto go-to-market. And ultimately, I saw how the financial landscapes really work from inside, how value is created, where the friction lies, and how many intermediaries ultimately sit between the capital and the end, the end user.
Joel: I mean, this is nothing new. I know this entire space kind of depend-- that is been built around this topic. But really being inside and seeing how much reporting is going on, reconciliation on operational drag, and how much friction there really is, and, you know, juniors is battling Excel sheets and missed trades and unclear settlement statuses, and you're just, you know, you're shocked how this even works, but it's obviously patched over with human resources.
Joel: So seeing the digital asset space and how it's, you know, truly digital first and native and programmable, it just made it seem like this is definitely going to be the future. And, you know, glad to say that we're now seeing the earlier stages of that adoption, right? Assets are coming on chain in droves, and we wanna build at the intersection of that.
Nertila: I love to see the adoption as well. So why crypto? It seems to me that you switch up from some traditional financial background to crypto. What made you, jump right into the industry? And why exactly DeFi and not, for example, Bitcoin?
Joel: Yeah, so the way that I got into crypto in the first place was during my studies. I had a, fellow student, who was, you know, looking at price charts on his laptop, and it was a data structures and algorithm class, and I was like, "Why are you trading? And what are you trading?" And he started talking to me about Bitcoin.
Joel: At the first instance, I, I thought it was intriguing and interesting, but you know, it's just digital cash. Effectively, it didn't really pique my interest all that much, obviously to my own, detriment, 'cause if I would've bought Bitcoin then, I probably wouldn't be working. but then soon after, I started looking at Ethereum, which kind of came out around that time.
Joel: It had its ICO around that time. This is like 2015, I think. And, I was immediately just struck by that concept of a Turing complete blockchain where you can really run business logic on top of the same technology that ultimately Bitcoin also depends on. And the reason why that really grabbed, grabbed me so, immediately was also just from a personal perspective.
Joel: I mean, I am half Nigerian, half Swiss. I spent a lot of time in Nigeria. I constantly, you know, have to, transact with family members in Nigeria, and you could really see firsthand how a society can suffer if they don't have solid, financial infrastructure that we here in the West completely take for granted, right?
Joel: So there was always a natural pull towards better alternatives for me. I mean, blockchain at the time really made the promise of open access, transparent systems, and giving everyone basically the same playing field when it comes to financial rails. So that just, you know, on a personal level and an intellectual level, captured my attention, and I wanted to make this my career from the first time that I read the Ethereum whitepaper.
Nertila: You went down the rabbit hole like the rest of us.
Joel: Exactly.
Nertila : You are working on a project company that is called Taler Finance. I would like to know more about what you guys are doing there and, what do you do on a day-to-day basis for this project?
Joel: Yeah, so I'm the founder and CEO of Taler. we started this company, well, me and my co-founder, Ismael, about a year ago. Glad to say that we're now, you know, launched or soft launched our first vault, and I'll get into the specifics of it in a second. just to give more context, so when I was at Morgan Stanley, I worked in the digital asset function, so I did a lot of work around understanding how crypto and blockchain technology can fit into the bank's different offerings.
Joel: And I did a lot of work around asset management at the time, so with the investment management division, trying to understand what kind of fund structures could make sense for clients, strategizing around the different approaches there, anything from private market to public market, et cetera. And a part of that, I also did like an educational series for the investment management executive level to understand the space and how it could ultimately potentially reshape how work is done in the asset management space.
Joel: And when that happened, the vaults started rising, I would say. first you started out with Morpho and then we had, you know, more sophisticated vaults appearing, and it ultimately is a more ve-- an akin to a on-chain asset management operating system, right? And knowing how the tech kind of looked at Morgan Stanley and then looking at that, I realized like, wow, this is, you know, this really has the potential to be truly transformative.
Joel: You can embed compliance on vaults. You can set the transparency around what is allowed within that vault and its approach in a way that you cannot really do without a lot of, work in the traditional space. So that's why I was like, okay, this is a space that I would love to work in, and this is what we did.
Joel: So Taler is effectively a neutral vault infrastructure for on-chain asset managers. So we help on-chain asset managers package their strategies into vaults. they can do that on our platform. And then we also obviously educate the different depositors and earners and platforms in the space that have clients who want to earn crypto in a safe way, on this offering.
Joel: So we help them also get, you know, ultimately distribution.
Nertila: Do you have any risk management system in place?
Joel: Yeah. So the way that we architected, Taler, or rather our developers in this case, is a bit more, I'd say, smart contract native than some other solutions that we've seen in the market. So whenever there is a decision around how to form a strategy on a vault on Taler you define that from the beginning, and then you set the permissions As an example, this vault can only access, Morpho, and then within Morpho, it can only access these particular markets.
Joel: Say I only wanna allow them to access a Bitcoin, stablecoin pool or Ethereum stablecoin pool, a specific one with specific types of collateral, then I can set that at the beginning, and then the smart contract actually enforces that. So whenever there is an action from a, you know, change or rebalancing, then this is enforced on a smart contract level.
Joel: If you do something that's not within that policy, it will just revert. It will just not be allowed. And I think that's like, you know, something that if a person who works in asset management really understands this and how quickly we were able to establish this system, it's going to blow their mind because a lot of the work that goes into asset management is related to also compliance and risk management and staying within parameters, and we've embedded that effectively in the smart contract level.
Joel: And on top of that, of course, our curators and, one that's already been on this podcast that we worked with, from the beginning, which is Tao and Vlad from Tao, they use very sophisticated additional risk systems to monitor the downstream risks, so the asset exposure and e-especially given the hacks that we've seen in recent history, that's an extremely important element.
Joel: But it ultimately always depends on a combination of how solid your vault infra is in expressing the risk constraints or making them non-bypassable, but also how good the curator is in assessing smart contract risks on the downstream side. So there you can do threat intelligence, you can do pattern recognition.
Joel: We also have some volatility modeling or, jump diffusion modeling that helps us or helps the curator understand, you know, what, the, the, the worst case scenarios are effectively. So yeah, there's a bunch of things that are overlaid here, but from a vault infra perspective, it's really the permissioning.-
Nertila:: What TAU Labs is doing is, I think an added value to the industry. Where do you think the profit and risk will accumulate in the future?
Joel: Yeah, I mean, the profit side, right? It's the big question. I mean, we are seeing quite attractive business models right now for curators in terms of, you know, managing assets and claiming performance and management fees. And, obviously as a strong, partner in that context to helping these curators, you know, package these products and strategies, we obviously also participate in that s- in that upside in a similar way.
Joel: And obviously this has been an Age old business model like asset management exists, you know, since the early 20th century, probably much longer, but in a modern context, probably since the 20th cent- early 20th century, and it's been a robust way to earn money. And of course, we see that as a very attractive commercial model for us as well.
Joel: In terms of risks, I think here we've gotten a lot of that question already answered by the market as of recent. We really see too many, protocols that have key man risk or single points of failure that ultimately are, you know, how people want to, or assets that people want to get exposed to. And, you know, it's sad to see that there's still protocols out there that don't really have a multisig set up properly or, you know, don't, have a blind spot in terms of their single point of failure.
Joel: But I think it's an also an extremely important thing because it also ultimately is gonna battle test all the different rails that we want to bring to the masses here, right? So you'd rather have this happen now when we're still a bit more, you know, insulated from traditional markets than when we already have a huge asset base on chain, and then we have those issues.
Joel: So I think this is, this is a painful but important lesson, and we know we have some growing up to do in the industry, but I think people are, you know, really coming together and helping each other out with things like DeFi United. It's extremely, you know, what you call inspirational to see this like almost community-led, recovery of assets.
Joel: You wouldn't really see that in the traditional space, and it also just gives confidence that there's always ways out of really bad situations. But at the same time, yes, we need to be more vigilant. We need to take operational security and smart contract security very serious, and that's also what we do
Nertila: Before we get back to the episode, if you are interested in getting access to over twenty-five thousand defined world datasets, including performance and risk metrics, visit our website tradingstrategy.ai for free data and professional subscriptions. Now, let's get back to the episode
Nertila: Regarding the latest hacks, especially in DeFi, what do you think has been the impact so far?
Joel: I mean, it's funny, like I speak to a lot of traditional, players obviously given my, my role and my background. I've come across, you know, I've probably come in touch with most of the big names in some way, and I still keep a dialogue open with them. and yeah, it's funny. For them it's, maybe it's just the way that it's communicated in the media is different this time around, but like they don't see it as that problematic.
Joel: obviously they see this as something that needs to be managed vigilantly, but I was concerned at the beginning to think that might scare off a lot of these players that are slowly making their way into our world. But I think it just, For them, they understand that risks exist as well, and if there is a way to actually mitigate these risks by doing the proper due diligence on your strategy, then that's great.
Joel: But yeah, in terms of like how it's going to impact the rest of the landscape, I think people just, need to do, the simplest things. Is making sure they have like geographically distributed multi-sigs on key, key roles, being very clear on the type of single points of failure that they currently have, and figuring out a mitigation playbook.
Joel: I've seen some people like first time ever, speaking about PagerDuty, and that's, an industry standard in the more established, software space. and I think we just we need to get baptized by fire and learn from it. But the cool thing about the, the DeFi landscape and people in the crypto community is that they're very quick to learn and they're very fast to move.
Joel: So I have faith that we're going to get better from this and get stronger from it.
Nertila: Definitely. Especially with the cooperation of everybody to recover funds and identify which are the bad actor in the space. What are some of your hard lessons in this industry?
Joel: I mean, it was something that I was aware of because I already, I was on the other side of this. I used to have to assess quite a lot of different providers and, teams while I was sitting at Morgan Stanley, at Accenture as well. But good technology is just not enough. Like, good technology is, is great, but it's not enough to convince an institutional client to work with you, right?
Joel: So what really matters is, are you able to understand the customer's needs, the, the platform's needs, or the institutional allocator's needs? And ultimately, you need that finesse to be able to, you know, convert them into, a user of your, your technology. And I think a lot of A lot of people in the DeFi space, they've benefited from the early days because they've, you know, had-- they were a first mover on something, and there was really no other options to use some of the major protocols.
Joel: But now it's a lot more competitive, and I think it is more in line with how it works in a traditional world or the traditional SaaS world, B2B SaaS world, where you really need to be more focused on the customer and creating bespoke solutions that really tackle some of the issues that they have.
Joel: Plus also, obviously understanding the regulatory aspect, and this is going to be even more pronounced as we go along. So being able to really look at things holistically is extremely important. This is something that obviously I had to also learn the hard way. at the beginning, we felt like we were some of the earlier ones building in the space, but we're by no means alone anymore.
Joel: so now relationships really matter and making sure that you're actually fulfilling your promises to your, to your customers, clients and partners. So that's what we want to focus on in terms of just efficiency and operational excellence.
Nertila: About the current market, what do you think about the current sentiment and about its efficiency?
Joel: current market, it's very cyclical. I've been in this space since about two thousand and seventeen professionally, fifteen in a personal capacity, and it just feels like same movie over and over again. So it does feel like we're coming towards the end of this bear market. We've seen some positive price action in the last couple of weeks.
Joel: And yeah, what is interesting is kind of this new participation from, these traditional allocators, right? We have bigger ones like, MicroStrategy and, Tom Lee that are buying their respective token, Bitcoin and Ethereum, and these flows have just become more structural and are, I think, putting us kind of a, what do you call it?
Joel: It kind of slowed down some of the swings in both directions that we have these more sophisticated long-term holders. So I think we're gonna continue seeing volatility come down, but we're still going to see a lot of demand for, on-chain different types of finance because like I said, I mean, when you look at these blockchain rails and what you can do, I mean, we built a full stack asset management protocol within a year with embedded compliance mechanisms that would take a lot more human resources to build out in a traditional context.
Joel: And it's just This is where I think the future really lies. This is where the interest is really lies, and we're gonna go away from just speculating on price action to like real- seeing adoption and seeing how this is going to affect everyday people and provide a better user experience. So I think in a market cycle, we're definitely towards the end of this bear market.
Joel: I mean fingers crossed, I guess. But in terms of just adoption cycle, I think we're at this inning where it's a little bit boring, I think, for people because we're not creating crazy innovation day in, day out. But we are truly refining some of these primitives so that they can be ready for large scale adoption.
Joel: So I think it's a cool space to be in right now if you're looking to get true adoption. but maybe a bit dry for people who are like used to just seeing a new paradigm shift every single quarter, which we had in the earlier days of DeFi.
Nertila: I have to agree with you on the impact of insti-institutional money that is coming into the space. We will see. Looking forward to what crypto brings in the future. Joel, thank you so much . Today's conversation was very insightful. I really appreciate you joining me on the podcast today.
Joel: Thank you so much for having me.