Onchain Risk Passport: Tokenized Assets with Particula

Añadido: 2026-05-23

[00:00:20]All right, and we're live.

[00:00:23]Thank you for everyone tuning in today.

[00:00:25]I'm Jonathan Juan leading ecosystem growth at Luxo blockchain.

[00:00:29]Today, I'm super excited. We have the pleasure of having Karsten Hermen joining us on the live stream today.

[00:00:37]He's one of three co-founders of Particular Ratings founded in 2023, I believe.

[00:00:45]Over 20 plus team members globally.

[00:00:48]Particula if I have it right, you know, aims to bring more transparency and trust in the world of digital assets through its provision of risk ratings and analytics for the web three space.

[00:00:59]Karsten how are you and where are you dialing in from?

[00:01:04]Yeah, very nice to be here. Thanks a lot for for the invite to be here today.

[00:01:09]I'm actually currently located here in Portugal like at the Algarve on the south coast, but mainly based in Munich also like where we founded Particular, but frequently heading between like London and New York. I mean, we did incorporate in the US beginning of the year. So, therefore we are not mainly a US focused company but lots of tech operations are located in Europe and yeah, I'm co-founder like you mentioned but also like in the CTO role. So, therefore very close to our tech team of course.

[00:01:44]Amazing. Amazing. I'm actually based out of London. So, when you're in the city next time, we should definitely Yeah, just last week actually. Damn, I missed it. I missed an opportunity, but there are more more things happening. I mean, looking at like the whole digital finance space, there's basically New York and London as like those major hubs. So therefore yeah, always coming back and forth. So I will be there very frequently in the next couple of years.

[00:02:08]Exciting, exciting.

[00:02:10]Um well, you know I'm very much looking forward to you know, exploring what you guys have been building at Particular. Maybe if to to start off uh for the audience you know, if you could give give an introduction of of who you are, you know, what you've built before Particular, you know, how you came into the Web3 space. I think that'd be a good place to start.

[00:02:35]Yeah, this was a wild ride. So I'm actually like a trained developer. So I started as a developer in 2008, so quite some years ago. You know, back then still doing everything manually like in HTTP, CSS, JavaScript and so on.

[00:02:50]Then also learned about Flash and HTML 5 in the coming years. And I mean then picked up very fast on WordPress as well and did lots of also websites. I had my own agency. This was like I think in the years 2009 to 2011, something like this.

[00:03:06]And then I turned a little bit from this like being purely a developer and then also like having my own agency more in this direction of like real application and software development for touch devices. So eventually ended up having a company for over 10 years producing touch monitors with interactive software on it. I can still remember because end of 2011 like one of the first clients was BMW. We're building like a 92-in touchscreen for like a for car show, for trade show as like a horizontal huge iPad you want to say so. But back then 2011, 2012 no one knew it yet. Like there was no iPad on the market, no big touch screens. So it was a really exciting time and I spent a lot of time also studying like interaction um interfaces. So, how can I actually interact with like this huge interactive surface? And then later on um I started producing also transparent screens, which you might know like from Minority Report, where you can look through the screen and still have like visible contents on the screen. And I think one of the really cool projects I did towards the end of running this company uh was for Google. Uh they actually um aimed to have like flagship stores in all major cities worldwide. They started to roll it out like in uh Palo Alto and in New York and in Williamsburg and in Chelsea. Um and I did equip them with like transparent screens where you can see the physical product inside and then having like the yeah, advertisement explanation in front of the screen. And they're still in operation. So, just uh when I was in New York uh 3-4 weeks ago, I did visit one of those stores the first time. And it's so cool to see that the products I manufactured a couple of years ago, they're in operation and still everything's running. But yeah, this is quite some years ago. And then in 2017, um I did yeah, discover I think for the first time the whole blockchain space and became active in it. And this dragged me in this direction from this moment on. So, I still had like the software software company by the time, but I was so intrigued, so amazed by blockchain as a technology and started to interact with it on a on a personal level a lot like day and night. And this went on for the for the coming years.

[00:05:12]And they always also want to do something really meaningful like a real project, you know, just that not setting up any random token or whatever. Really building something that also serves a certain purpose and has an impact. And finally then, I think uh by 2020 um even the end of 2019, um I teamed up uh with two um other guys to build a Green Trade by the time. So, we tokenizing carbon credits and also ownership rights in environmental assets because by that time it was like a huge problem to prove where carbon credits are coming from. And we built the whole pipeline on chain to see how it's coming, how it's being sourced, how it's being traded, and so on. And the tokenization was back then a really big part and very new. So, I think by that time I did not completely understand yet how much tokenization will also change the financial industry in general. So, we focused really very much on those environmental assets.

[00:06:05]But, it was a really interesting right?

[00:06:07]So, I did this for 3 years and that's really good because I also learned firsthand how a token issuer, how asset issuer is um has a really hard time to sell this kind of product to clients. I mean, back then I worked like with Volkswagen and these kind of corporations. And on the one side I had like a product which they knew, but had this technological wrapper, the tokenization around it. And this was like very difficult for them to understand, okay, how what does it actually change about that product? And therefore, it was difficult it was really difficult back then, uh but a very valuable experience. And I mean, then starting particular 3 years ago was the perfect continuation because that problem I faced by myself as a token issuer is something we are tackling now.

[00:06:49]Because it's always the question is always about trust and transparency. So, when when I'm buying when I'm an investor and deploying capital into a tokenized asset, into a token, I need to trust that I have real tangible value and hence I can really redeem the token against some kind of value. And we bring in this transparency on the one side to do evaluation diligence, but on the other side also like um this deep dive industry rating for investors to understand in a very simple way is this like we call it like investment grade or speculative grade. And yeah, I wish I could have had this kind of solution back then when I was on the side of the token issuer.

[00:07:25]Yeah, I mean, you're tackling a a very large problem that's problem and and creating a solution that's missing in the space because I feel like in DeFi, especially in digital assets, there is uh you know, with the with the sharp ratio, there's the the numerator which is all about the yield and and what you could potentially earn, but then people kind of forget about the the standard deviation part of it, which is, you know, what is the risk associated with an asset and is it really being priced uh appropriately, right? And and there's not a lot of transparency or or readily available kind of data uh for a lot of these kind of digital assets. And so, um No, fascinating. Um and then, you know, for for your other founders, uh Tim and Nadine, you know, uh when you like how did how did that all happen and >> [laughter] >> you're like, "Oh, this is a huge gap in the market and, you know, we need to go at this." Because you know, just following uh you know, the progress of Particular, it's it's advancing really quickly, right? Um you know, um yeah. Yeah, I mean, maybe to start with the with the fun fact uh because of my two co-founders, uh Tim and Nadine.

[00:08:30]Tim is in the CEO role and Nadine uh is like in the CGO so growth uh role. And we met when I was already uh I mean, I've been living 15 years um in Berlin.

[00:08:40]They were already in Munich and we met uh due to like a conference, like crypto asset conference in Frankfurt, I think the first time in person. And it's so funny because we are all coming from the same area in East Germany. So, I was grow growing up only like, I don't know, 10 minutes by car from them. So, we eventually met when we are completely out of that region already, but we're coming from the same part in Germany.

[00:09:01]So, that's just like a very funny coincidence. But, they actually started to uh with that idea to build like an index of the markets to see like indexing tokenized assets on the market, like creating some kind of transparency to understand which products are actually available to invest in. And then we started, so when we met each other, it was like okay, bringing out this, let's say, business perspective together with like the technology perspective and go much deeper. So, not only indexing the products on the market, but also analyzing them, enriching them. And therefore, really understand what is being offered here, how does it work on they legal, but also in a technological side? And therefore, yes, 3 years ago, I think it was around like March, April, something like this, we teamed up to form Particular. And yes, since then, like you mentioned, was like a really fast development. So, we also didn't expect it in this way, because back then, when we started, no one was interested in having a rating for tokenized asset, for tokenized product, because everyone was like, "Okay, the underlying asset already got a rating, so it's still the same product I'm buying. Who cares, you know? Why do I need that in addition?" And it took a while to also provide education on the market, but also see what's happening on the market. And of course, everything that was happening around now kept our drift and so on and so on. We had so many problems, I would say issues in the DeFi space. And also, when we look at like the intransparency of vaults in some cases, this all of that helped also for the general public to understand, create like this kind of understanding, "Okay, there's more to that. You know, it's not only about on-chain activity to see how price and volume is developing on-chain. It's also about everything that happens off-chain and about the actual product structure, about the smart contract design, about regulatory needs." And in this way, starting from just indexing tokenized assets, we did transition over the first year to also provide analytics and better understand what's behind that. And of course, by adding more and more data, we've been able to create a pretty good benchmark across the market. And therefore, also this whole assessment approach, this rating score approach, also to understand, "How do I perform?

[00:11:11]How do I rank among peers in the same asset class?" This was all developed already back then. And then now, 2 years fast forward, we can see like the market has heavily adopted risk ratings in general, and the importance is increasing. I mean, I guess we're touching base on this later on also in this conversation, but yeah, basically, it was really the market that pushed us towards bringing up a solution to solve this trust and transparency problem.

[00:11:35]Okay, so so then the solution for particular is is basically split into two. You've got the rating side of things, the assessment, the the generation of the uh the score after all of the assessment, and then and then the analytics side, which is where, you know, any institution or or user >> Yeah.

[00:11:52]that's >> it started with analytics, so it's now more on like more on the monitoring side uh for that reason that I think data analytics in general on-chain data analytics is something that almost became maybe it's too much, but almost became like a commodity, so you can get it like everywhere on-chain analytics. I think we are more on the aspect of monitoring because once we did score a tokenized asset, we have several actors in the market. We have the issuer itself, who who may have also some several tokenized assets issued over time and wants to monitor their performance, but also we have asset allocators who actively deploy and what they monitor where did they deploy in. Or it's about due diligence. So that's why I'm a little bit going away from this general analytics term because it's like a really specific purpose. Why do they want to see the data? And typically, it's not a one point in time analysis.

[00:12:43]They would really want to track it over time and see how it's developing. And also when we see now the trend that also like I mentioned boards earlier, but also like uh general protocols, lending protocols, we all saw with our horizon also the first protocols accepting tokenized assets as collateral, but also exchanges were starting now to trade tokenized assets. For them, it's really important to constantly monitor the risk profile of a tokenized asset. And that's how we designed the solution. So therefore, we went a little bit back from this generic analytics approach really to specific monitoring. And I mean, one big part is here, I mean, a big learning over the past years what's actually important for an institutional investor to to learn to understand to monitor because um the perspective of like a retail investor and institutional investor is completely different. I tell you just one quick simple example.

[00:13:33]Typically, when I look with my retail lens, me personally Carson investing in token on a token design smart contract design I can see the smart contract can be paused, transactions can be freeze.

[00:13:43]For me it's like a warning sign, you know, I'm like, oh, okay, the token issue has full control. I've basically no rights in this situation. Looking on it from like an institutional lens, institutional finance lens, then for me it's a mandatory feature that this is in place because this is kind of also risk and emergency management. If it's possible to freeze the whole contract and also it's required within some of the regulatory requirements. For example, in Europe within like the Mika regulation, there has to be a pausing functionality implemented. So, therefore we can see what an institutional client wants and what the retail client wants is completely different. And we are very much focused like on those institutional needs also in order to develop further the whole institutional finance sector on chain. And we did basically focus, fine-tune all of the systems towards this kind of direction.

[00:14:33]Got it. Yeah, I mean, especially with all the interoperability and knock-on effect one protocol can have on another and on the assets themselves.

[00:14:43]It's very dynamic cuz I mean, in cuz I remember pre, you know, this was like pre-2008 when I was just getting into or or learning about finance, talking to some people, you know, I credit [snorts] rating agencies, it's very much uh it's not the most kind of proactive approach. At least back then, I'm sure, you know, post-2008 things have changed, you know, the market evolved since then, but uh especially in in Web3, it's that that one >> just said a very interesting uh thing, interesting word like a proactive approach. So, typically, a token issue uh has no kind of obligation for any kind of disclosures if they're changing, for example, the smart contract design.

[00:15:23]So, therefore I can maybe own a token and overnight the whole ownership rights that are programmed into the smart contract design are being changed just by performing a smart contract update.

[00:15:33]As an investor or a token holder, I will not know that, you know? And these are the things that are really big risk when we look at institutional finance into regulated space into really investors who are deploying 100, 200, 500 million US dollars into assets.

[00:15:48]And that's how I mean we tuned it towards this audience because we then notify them. We scan on a daily basis for the current smart contract deployed on chain, then we compare to the last state and then we can map out what changes happened. And what does it mean for the risk profile of this token as an asset?

[00:16:04]Got it. Got it. And then if we if we step back, you know, for for people who are not as familiar around, you know, how risk ratings work and and the assessment of of different assets, um yeah, how are things being done today if if even at all, right? Um >> [laughter] >> on the retail side and then, you know, how are you guys kind of doing it differently and um you know, if you know, if you could walk us through, you know, how Token Metrics does put a rating together and then, you know, when you are you know, onboarding it either from the issuer side uh or an institution that's looking to monitor, you know, their portfolio investments, um yeah, how does all that work? Um Yeah, so maybe start I mean actually we have three target audiences. The third one um I think it's the most interesting one also later today when we talk about our on chain infrastructure, but let's start maybe with the easiest one. This is more like the asset allocator um because we have like also for our platform like a normal customer login, uh then we can set which kind of tokens and the issuers are visible for that client. He can just log in, has an overview for list about all the issuers and tokens that's interesting that fit to that portfolio for example fit to the risk profile based on the rating score and then they can just really dive deep into it. So, in general, we have structured it on three levels, so the issuer level, the token level, and the underlying asset level. And I tell you a little bit more about it in a minute.

[00:17:27]Looking on the token issuer side, we have like a dedicated issuer portal where the issuer can submit like private information because for us, you know, it's not only enough to look at publicly available information, we also need to look into private information, for example, about like a business continuity strategy, about like the team set up, their history, about like the financial audit from the past, about also like agreements they have with other players on the market or providers they have integrated. And also, in lots of cases, how institutional clients are tokenizing assets today is always a mix of like on-chain off-chain procedures.

[00:18:03]And off-chain procedures, of course, difficult to see publicly, so therefore we also need like to have information about that. In addition to it, we do enrich the whole data set through our data pipelines for once and one set for on-chain data. So, we are like analyzing constantly the token performance against my contract. We're scanning for functionalities, also then what I mentioned earlier, how it complies with regulatory requirements.

[00:18:27]We're checking for over 80 security-related metrics that are very common or based on our experience in the past 3 years happened on the market.

[00:18:35]And also, we have connected off-chain sources like commercial registries and so on. So, therefore, it's like a really 360-degree view. And looking at like the issuer level, here we do evaluate, for example, the legal structure. And often we see even a multinational structure in place that you have a company who is sitting in country A, then they maybe have a subsidiary in country B for certain service and another one in country C. This came up especially because of those very different status of regulation in the different nations in the world. So, we can see lots of products that have been structured within like the Cayman Islands or British Virgin Islands or El Salvador, although the company itself might sit in the US or another country and maybe their target audience even in a different part of the world. So therefore we map out completely how it's being structured and which parties are involved. Because in this kind of financial product structuring it's not only the asset issuer, we have a custody provider, sometimes we have an asset manager, we have a fund administrator and so on and so on. So several parties who are working together on this tokenized asset issuance. And then we look at like the internal documentation, risk management, track record and so on and so on. So it's quite comprehensive on the issuer level. Looking at the token level, um, it's of course like I mentioned smart contract design, smart contract performance, security, also like the integration of third-party protocols and libraries, the integration of oracle providers. It's actually a quite sensitive [clears throat] point because we can see also very often that there's no fallback solution in place.

[00:20:01]So if the oracle contract is not reachable, there will be just a zero value or the old value will be used again. Now thinking about the huge volume happening, it would be a big problem if like a 24-hour old pricing value would be used, you know. So therefore we're checking is there fallback solution in place? Is there a deviation check in place with the general market which could have prevented the case we have experienced with the Drift protocol. So it's not enough to have only one exchange as a source for the price information. We need to benchmark it against other sources as well. And there's so many factors we are looking at and one thing is also like the network level. So this is a really critical point because you were also asking how is this actually performed today and maybe also in a traditional way. So in the traditional way, when [clears throat] you look at like credit ratings, which is like what's existed for over 100 years already, it's really about the risk for total default. So it's only focused, the rating and analysis focus on the underlying asset and its characteristics and performance. What's the risk that I could invest in it at a total default.

[00:21:03]Default. For us, we are looking at what's the risk that I cannot redeem my token against the underlying value. And that's why we are looking not only on the underlying asset, the portfolio composition, the historical performance, and so on, but also on this token level and this issuer level. And on the token level, we say, "Hey, this kind of risk rating, this risk profile is valid only for one chain." So, we do award risk ratings for a token for each chain where the token is operating in. Because each blockchain, each network comes with its completely individual set of risk metrics looking at the governance structure, looking at centralization aspects, looking at general performance, security, further developments, incorporation of compliance features, and so on and so on. So, therefore, we're awarding the rating per network.

[00:21:55]And that's a fundamental difference. The other difference compared to like traditional finance space is that we have like dynamic ratings in place. So, it's not the case like what you know from TradFi sector, the rating is being awarded once, and then it's valid for however the product how long it exists or until an update is happening, maybe in 1 year, maybe in 3 years. For us, it's completely different because the on-chain market is highly dynamic, 24/7 operating, and from today to tomorrow, the ownership structure could change, from today to tomorrow, the wallet holder concentration could change. So, really material changes that are influencing the risk profile of this investment. And therefore, our approach is that we have like a programmatic rating framework embedded in our platform, and anytime one of those over 300 data points we're looking at is being updated, the risk rating score is being recalculated. So, in order to always reflect the most current risk profile for this token as asset.

[00:22:55]And it is something which is completely new. So, dynamic rating is something let's say the world has not seen so far and it was also a hard time for us to educate it and bring the market to this level that they understand okay on the one side it's not enough to have a static rating in place needs to be highly dynamic and B it's not enough to what only one rating doesn't matter which network the token is operating we need to reflect every specific network characteristics in order to really have like a profound risk profile for tokenized assets available. And yeah in this aspect we send our rating framework again we're looking at over 300 data points we do constant evaluation of that and if the rating score changes it's changing but this is like also in our aspect the enabler for decentralized finance to work with tokenized assets because how should you work with tokenized assets in within a DeFi protocol that's 24/7 active if you would need to consume a static rating in a PDF document that was refreshed 3 months ago. So it doesn't reflect anymore how the token how the risk is behaving as of today in this moment when I want to deploy capital into it or change the portfolio composition or whatever.

[00:24:09]This was a long answer to your question I could go on but maybe I stop here.

[00:24:13]No I know it's fascinating I I wish you know public companies could could do that as well rather than quarterly.

[00:24:20]I mean it's also it brings in some difficulties you know so like I mentioned this is something that was not happening so far in the history of ratings and of course it's a completely shift in how we see risk ratings but this highly dynamic nature of on chain markets demands it but on the other side like you just said it would create a lot of disturbance in traditional markets because the traditional world is not made for this kind of really fast processes that are happening on chain. I mean on chain we're looking at high grade of automation predefined rules I mean or agentic economy is also just around the corner so therefore we are completely going in this direction how the financial markets operate in the future, not trying to imitate the same way how financial markets work the last 100 years.

[00:25:07]Got it. Got it.

[00:25:08]And and I mean, cuz if Particular has you know, done ratings on like 200 assets and you guys are tracking like 300 variables, that's like 60,000 kind of data points. Like, in practicality, how um you know, like what part of it is manual, what part of that automated? You know, are you guys integrating kind of AI to to help with this? Um Seems like a lot to manage and and to monitor uh live, right? So, um Yeah. I mean, there are several answers, several components to it. Um of course, um also as a maybe as a disclaimer and as a rating provider, I also need to be cautious what to say, especially about other players on the market and so on. I think that's clear. But, I cannot, of course, reveal all the secret sauce we have internally. But, what I can say, I mean, partly I described it already. We have this one side which is like a manual entry by the issuer. Why does he wants to do it? Because he also wants to become visible for asset allocators through our platform. So, there's like an incentive also to provide data. And as mentioned, for lots of off-chain data points, there's simply no other way to directly getting it from from the actual company. But, the main part, the majority of our assessment is conducted like in an automatic way.

[00:26:17]Um I mean, all the metrics we are monitoring on chain and where we have also off-chain APIs connected, all of that is like constantly flowing into our rating engine where we then recalculate the scores. So, there's a high grade of automation in place. And of course, we also utilize AI in a quite a quite extensive way, but more like in a very narrow way. So, for really specific use cases. So, I tell you one example. When we look at like KYC, KYC has several dimensions. On the one side, which KYC procedure is required by the regulator where I'm operating with the company. Then, how is KYC or KYC procedures defined in the terms and conditions? What is being also promised to the client who's reading it and interacting with it? And how is KYC enforced on chain? How was it integrated into the smart contract? Is it being enforced only when I perform like a token minting, token redemption, secondary transfer, and so on and so on?

[00:27:12]So, therefore, we combine also lots of different data points together. And for this reason, AI helps a lot because a um like a fund documentation could have 200 pages. Terms and conditions could have 60 pages and so on and so on. And you can imagine it's quite hard to make these interconnections between different data sources and different data types.

[00:27:33]And that's where our own systems helped a lot. And how can this actually work?

[00:27:37]Because we also have like a team of analysts in place, of course. I mean, just to give you an example also about the complexity within our like tech analyst team, we have two PhDs only caring about blockchain networks. So, they and like over six, seven years each only in analyzing blockchain networks, made their PhD in this topic. So, there you can see it's really lots of complexity that we are um looking at.

[00:28:00]And it's really something we also want to make easier consume for people on the market. Because one of the biggest constraints on the market is really that people cannot estimate the risk profile of the tokenized asset and therefore they will not invest into it.

[00:28:14]We make it easy, we take those, let's say, 200 hours of the diligence away from them. Plus, we do also harmonize data sets between different asset classes and jurisdictions. So, I can then compare like a tokenized asset with the issue located in Liechtenstein and the product may be tokenized gold with the tokenized asset issue located in Singapore where the product is like a tokenized money market fund. Because we do harmonize it and also we abstract those values so we make it easier to understand. So, we show really the client how our access controls designed, how our general like technical setup, which parties are integrated, which dependencies are existing, and so on and so on. And yeah, it's like quite some extensive work we're working on, but I think the last 3 years taught us that in the combination of using technologies like AI, training also local models on a specific domain, on a specific topic only, so we have then one model only for KYC, one model only for like smart contract security, and so on and so on.

[00:29:11]But also constantly feed it with like this real analyst feedback, like a real analyst who would check it in detail and provides also feedback back into the engine. And in this way, I would say we built something like like a flywheel, if you want to call it so, to become more scalable. And we also expect, I mean, like I said, we did look at over 200 tokenized assets so far on the market, so we've a pretty good idea where the market is standing, what are best practices, typical pitfalls, and so on.

[00:29:38]But we expect like a huge increase in token issuances in the professional sector in the next years. So we also want to become ready to tackle that really at scale.

[00:29:48]Yeah, [snorts] I mean, it's it's clear on the token, obviously from the user side wanting to, you know, have more transparency on the assets that they're looking at is is clear, but you know, based on what you're saying on the token issue and issuance side.

[00:30:03]Mhm. Probably quite a bit of demand because it's like you know, if you're issuing a token for your project, there's so many different variables that you probably, you know, have not even dived into think about. If you spent all your time trying to be compliant with everything, especially with the incoming regulations and It's a huge lift. on the technical level, smart contract level, it's it's uh it's very hard to aggregate all of that information to make sure you're doing everything right. So working with, you know, um a party like Particular hand-in-hand would inform a lot of those kind of early decisions on how how you operate, right? Um Yeah, I mean, we are also doing like a so-called a pre-launch assessment, where we do already assess the whole structure, the legal structure, company set up, the token product structure before the product is hitting the market. And we also have a very cooperative approach. So, we really work together with the token issuer to also maybe contribute to increasing the quality of assurances on the market because by learning from the best practices and the events that happened in the past years, we map out where can we improve the whole structure and typically the token issuers also accept those and brings it to life. So, therefore, the product is being launched launched on a higher quality level than before. And that's also how we we are actively build and contribute to like having a better, more secure, and higher quality market of tokenized assets in place.

[00:31:26]Got it. Got it. Um you know, uh would would love to kind of also dive in, you know, how you know, the the digital asset risk kind of passport that you recently launched in March uh interfaces with, you know, Luxo as an ecosystem and and also the tech stack.

[00:31:43]Um but you did mention uh you know, uh vaults, which is which is, you know, a hot topic. I mean, yeah, as a hot topic, uh yeah. And any kind of insight there on on what's happening for for, you know, you know, I haven't been following the whole the whole trend or or or, you know, the wave in what vaults, but uh yeah, would love to, you know, hear anything you're seeing.

[00:32:08]Uh Yeah. I mean, vaults uh if you want to explain it like in simple terms, basically like the on-chain version of an investment fund. So, typically, I have like the vault provider in place, the infrastructure provider, I have like an asset manager, and there's actively there's an active process of deploying capital into tokens, into assets, constantly monitor their risk, and rebalance also the portfolio. So, the vault is basically doing the the work for me. When we look at like vaults where actively invest, then you also have like lending vaults who are more for the purpose also to accept tokenized assets and tokens as collateral and lend then against it. So we have also different ways how bots interact with digital assets. But the complexity which is currently coming up on the market and we see this a lot is that when I'm deploying capital into a vault, I also get like a token, a vault token, which represents like a fractional share basically into the assets in the vault.

[00:32:59]And appreciates in terms of like any kind of revenue that has been accomplished by investing into assets in the vault. And now what happens is that then I have another vault and this vault is investing into vault tokens. So actually each of those tokens represents in another vault a set of underlying assets or a vault invests maybe into a stable coin but the stable coin is backed also by a certain amount of assets. So we can see several layers adding up now where I might invest here into a vault and think okay it's deployed in those vault tokens but each of this token is also representing a portfolio of assets and each of those tokens is also a portfolio of assets.

[00:33:41]And therefore you can see risk as such becomes a very very big term and it becomes more and more difficult to understand how risk is building up. And of course we also want to help to bring this kind of transparency to the market and understand the risk profile of a vault. So we also actively work like on our internal methodology for that to do some projects in that matter already and the trend I mean the general trend on the market is to yeah utilize vaults like as an yeah investment vehicle investment fund where I can then put in like my tokenized assets also like as a very safe collateral and they can work something is happening with them. So I do not have any more my funds my assets sitting idling in my wallet they're now really actively producing a yield. And I I that's like a really cool thing um, as we have also seen, um, not sure if you followed this when Centrifuge did introduce like their D E R W A tokens.

[00:34:39]So, basically they have a wrapper around tokenized assets, which will basically take away these regulatory requirements of KYC and so on, which makes it possible then also for retail customers to invest in those institutional grade tokenized assets. And I think vaults are a very good way also to open up this whole market for more retail clients, makes it easier accessible and also reduces a bit the risk. Because a vault becomes really interesting when there's active risk management in place. It's not only I am deposit make my deposit and see what happens. There are really people, there are mechanisms, I mean, agents of course also something that's coming up. There's an active risk management, there's an active monitoring, there's an active rebalancing of the portfolio. And therefore, bottom line is I see vaults in general as like the major financial product in the future for any kind of audience and any kind of like asset to invest in because the structure, there are of course different structures on the market, just makes it easier, more accessible and better manageable for everyone. And I mean, combining this of course with the primitives of blockchain, we also have like a fully auditable process in place.

[00:35:48]Got it. And and it's all because you're you're kind of mitigating any kind of risk with that particular asset class or basket of assets. And Yeah, I mean, mitigating risks can can happen in in a lot of ways. Um, there are also still lots of experience we still have to get in the future. I mean, one really big, uh, trend right now is like tokenized private credit. Uh, so we even looked at tokens that are representing like 70,000, uh, loan positions. This is all like SMEs, so small middle size company loans. And you can imagine who, this is like a huge lift uh, to to estimate the risk profile of this token with this another this extensive basket of underlying assets. So, therefore, there's still lots of things to solve, but in general, yes, of course, orienting myself on investing into vault compared to the situation that I do not do diligence on 10 tokenized assets by myself. Choosing the vault with an active strategy, active risk management is much less riskier than doing everything on my own. That's I think a good a good perception of what's happening and that's also why I mean the vault as this kind of investment we get to this way of investing into the market. I think has so much potential that we only unfold now in the future when I imagine I have on my mobile wallet all my different investments.

[00:37:05]Everything is actively managed and I'm just like the normal person investing maybe I don't know 1,000 euro, you know, not 100 or 1 million. So, I get now the possibility to benefit from a really professional investment approach without being in this kind of league of people and companies.

[00:37:25]Yeah.

[00:37:26]That's exciting.

[00:37:27]Yeah, that's exciting cuz yeah, it's going to be huge democratizer of you know, the different type of asset classes like retail can have access to.

[00:37:36]>> Yes.

[00:37:37]And I mean, it also makes it possible to create more demand on the market for certain products because the vault itself due to the composition of assets, it can also yeah, a little bit rebalance what's like the main focus. So, often we can see there's something we call like a cash leg. So, I have also a mix of tokenized assets that might be not so liquid, but also then cryptocurrencies stable coins that are highly liquid in order to have always enough liquid assets available also to redeem tokens to cash out for some of the investors. So, therefore, there are lots of thoughts around like investor protection, make it more suitable. I mean, everyone wants to have like a same day like an instant redemption possibility and I think this takes away a lot of risk because otherwise, if I want to redeem my token now and then need to wait, I mean we have seen cases where you need to wait a full months or even a full quarter. It's horrible, you know, we are in 24/7 auction markets. When I want to redeem my token, it should happen right now in the same moment I'm hitting the the button and confirm the transaction.

[00:38:36]And I think therefore um it's yeah, it's a little revolution that's happening with the introduction of walls to the market.

[00:38:44]I mean you're already seeing issues like that in private credit with the blue owl, you know, closing their redemptions and and all these different, you know, credit funds offered to retail, right?

[00:38:52]So, it's uh Yeah, it's a it's a hard kind of not to to to solve, um but also making it available to retail, which is, you know, appealing for a lot of institutions as well, so and to and to grow that class, so. Um Cool. Um now, like on the you know, on the digital asset risk passport side, um you know, maybe stepping back like, you know, people haven't really thought of Lukso as you know, a chain you know, attracting a lot of DeFi protocol and use cases. Um and and and given Particulars' involvement in a lot of DeFi protocols and and issued assets, um you know, I'm curious and I'm sure the community is curious as well, you know, um what what kind of brought you to Lukso and and you know, what made the chain you know, or or the tools and the tech stack the right fit for um what you're building at Particular at the current moment.

[00:39:48]That that's a very good um question and we have seen lots of actors providers on the market failing decisions based on like the hype or popularity of a certain network. And I mean for us it's really like the technical capabilities. So, looking at like the landscape of blockchain networks out there in the market, most of them are operating on principles that are over 10 years old basically and just copy each other in some aspects. We can see lots of extensions happening on like the major chains in the market as well, but it's always like trying to Yeah, provide like a new color to an old piece of tech that's already there, you know? And I think when we discovered Lukso and also, of course, like the collection of new standards that are available and this kind of also feature to build together exactly how I need it, this was like really fascinating. And we also started when we started to to work and play around with the new standards, we we've quickly seen it this enables us without building so much tooling in-house to directly bring this kind of case to life. Because they are I mean, I can remember it's always about like building blocks, you know? I heard that term very often I was in the Lukso community. But, it's really the case that we look at it also as building blocks and we can build together how we need it and which use case we ever need. And one really important point was here the possibility to have like extendable metadata in place. Because just what we talked about earlier, those assets, those risk profiles are constantly changing. Meaning that in a traditional I wanted to say in a traditional blockchain world because I see Lukso more as like the new blockchain world.

[00:41:23]So, but let maybe just let's say in the in the typical blockchain scenario, um you have like one value and you replace it or you link it to like an off-chain storage and then you replace it there through Google Drive link or whatever. Or and you constantly need to replace it and we wanted to have the possibility to constantly expand those values. So, also as like an asset allocator since since an investor, as an exchange or whatever, I have the possibility to have like a fully visible on-chain audit trail about all the different risk rating updates that happened over time. How did they come up? Which event led to this new risk score? When was it done? When when did it actually change? So, in the end I have a full history and I can see that for every value I'm only adding content.

[00:42:09]I never replace it. Because again, we are like in the rating landscape, so it's really important to create what I mentioned is on-chain audit trail and to have constantly like evidence for why this was going in this direction, why this new score was assigned. And the next thing is also of course I mean we will also look into it in a minute.

[00:42:27]The risk passport is not only for like rating scores and subscores, it's also like for proof of reserve values, for red flags and alerts, for identifiers like the LEIs that are not for the issuer company identity. Then maybe an ISIN or CUSIP for the underlying asset identity. You know it like from a traditional stock market or like the DTI like token identifier on the token level. So we are storing a lot of information in it and when I have for example now a certain red flag, might be about the holder concentration, about the legal aspect, whatever it is. We then, if it's remediated, if it's like solved, we just append like a new entry, okay, like this red flag changed to new value. But I can always see how was the value before and I think this is really essential because it's not enough to only have this point-in-time status quo of the risk profile. I also want to see the history. And then as like a professional institutional investor, I can also like do some modeling about it.

[00:43:21]I mean we are not doing like any prediction about the future, but if as an investor I have the possibility to fetch all the rating updates and all like the risk signals from the last 6 months and everything is stored on-chain fully auditable, then I can run my own analysis and prediction on it. And we can also see that this way of extending values instead of replacing them creates completely new business models because with this data on-chain, I can also have I mean agent economy is something really excited about awesome combination with the risk passport, but then we have it possible for an agent to read all of those records natively on-chain and act on it. And I mean it's part of the metadata is only one point. Also like the sole like permission system is highly interesting for us because the risk passport you can imagine it as a dynamic vehicle on chain that can store different kind of data which comes from different sources. So we as particular, we are also only one maybe the major provider will be one of many providers of data that flow into the risk passport. And by the way, just for the audience, the risk passport is like an NFT. So simple as that. It's an NFT with attached metadata. And then we have in the traditional space, you have like a fund administrator. Typically, he's calculating the NAV, so the net asset value on a daily basis, submits it to the issuer, maybe by email. Then the issuer submits it to someone else, maybe to the organization provider. They bring it on chain. And with this whole way of how I can manage permissions on Luxo, I can manage which party can write in which value in which data field of the risk passport and who can also read it.

[00:44:54]Because you can imagine ratings are something that's like not a public good.

[00:44:59]There's lots of work going into it.

[00:45:01]There's like an IP or framework behind it. We also want to be able to control who can actually consume it. And I think this is also something that became very practical, very easy to do on Luxo because we can specify in a very easy way to say, "Okay, this is now like an exchange. They have a subscription running with us. They get like an access NFT and they can consume data from the risk passport natively without any problem." Then there might be another party, let's say, I don't know, like the fund administrator. He's only allowed to submit this daily NAV value for this really specific field on in this NFT, but he cannot read the other data. So it's protected from them. So there you can see we also established in this way like a new business model because when you look at like risk data so far or like the rating industry, the issuer is paying for it. It's a one-off transaction. That's it. In our case, we are going in a direction where risk data is being consumed continuously. And that's only possible if we are able to manage permissions, track down all the activities, and only allow like certain players who are paying for it to consume this data. So there's a constant stream of revenue coming in from a protocol, let's say a lending protocol that is accepting tokenized assets as collateral. They have the need every time someone wants to redeem it or deposit a new set of like tokenized assets to consume the most current risk profile from the risk passport. For them, it wouldn't be enough to have like a risk profile from yesterday cuz maybe something changed today and they will calculate the loan-to-value ratio or the interest rate in a separate way because of that. So, we're looking at a future where every token, every tokenized asset that is available on chain, gets one risk passport attached to it. The risk passport is existing on all the chains and every chain where the token is present as well.

[00:46:44]The Luxor set of metadata and functionalities is basically the core, but all these other NFTs on the other chains pull for certain value, like the rating score, the most current value from the sole history from the Luxor chain. And we do mirror basically this this data all the chains and therefore it's available on all chains to be consumed by DeFi protocols. So, in the future, we envision it in a way that a DeFi protocol, an exchange, a lending protocol will not perform any kind of action without fetching the most current risk information from the risk passport for the certain asset. And we talked about vaults earlier. Even more interesting, just think about you are now an asset manager, an investment manager for certain vault and you need to constantly monitor four, five tokenized assets. That's a lot of work and we make it much more easier by bringing all of this risk data on chain, stored, created full history, and make it consumable.

[00:47:37]So, they can just build on top of it and define their rules. What does happen when the risk score is falling below a certain threshold? What is happening if the proof of reserve attestation was not submitted today? What is happening if I get like an on-chain red flag alert about the wallet holder concentration because the top 10 holders are now holding over 80% of the supply. There you can see the risk passport is basically the basis for D5 protocols to interact with tokenized assets and in the same way also for the agent economy.

[00:48:07]Because I mean, we all we all have seen it how easy it is on Luxo for an agent to create his own profile and start interacting with the market. And we see the risk passport as the data source for the agent to then have a decision in place, okay, now I invest into this asset, now I am liquidating the position and so on and so on. So, we deliver all of this risk data on chain for all of those use cases. And I mean maybe also looking at the time, I also wanted to show something. So, this is something just as a disclaimer. So, this is really for like a token we have rated, but this is like in the testnet because we are also running currently like edge case simulation etc. But I think it's a good case. But it's important to mention that this is like because it's not reflecting the actual rating that was like in a testnet. And we are looking also at how does it behave when the rating score is changing frequently over time depending on the network. And here in this case, it's about like a tokenized asset. Or just to confirm, you can see the screen, right?

[00:49:05]Yep. Yep.

[00:49:06]>> Yeah. So, this is about like a tokenized asset that's present on Solana and Ethereum and both networks have completely different risk profile and therefore also different risk score. So, we are currently also testing, okay, how does a protocol behave like a lending protocol who only got, let's say, 50 million in tokenized assets as collateral deposited, how can they behave, how they can act on it when the rating is then changing and the risk profile is changing. So, therefore, I mean, we can see like a multi-chain strategy in place for for many many tokens on the market and it's increasing. So, I think that's like the general narrative now that there is not this one chain, it's always like a multi-chain strategy. And you can imagine that maybe over time you have four five different networks where the token is being deployed. And here's then the interesting part where we can see how did the rating score develop? I mean, this is also more like for technical audience to see what's like the full way of like our system to also then track down what's happening and write those entries on chain.

[00:50:06]But, the message is here, we are creating this full history. And I mean, you can see couple of pages. So, we had like over 115 updates so far. This is completely residing on chain. And the fact that we are now showing here the score per chain, but we have the full history available is only because of those building blocks we have available on Luxo. And we did work like with cross-chain messaging providers in order then to mirror this information to the risk passport on other chains. So, in this way we have one source of truth, but we are horizontally scalable across over 160 chains where the risk passport is available as of today. And this is basically just like a monitoring interface. I mean, you can see here like this proof of reserve simulation. You can see here possible alerts that are coming up. So, therefore, it gives a very good idea idea about the versatility of this highly dynamic data object which is fully living on chain and is growing over time. And I think that's the really important part.

[00:51:04]Ratings are not anymore static. They are highly dynamic and the risk profile, the set of risk data is growing with every activity, with every interaction.

[00:51:15]And and not a centralized, too, because yes, particular is the initial um ratings issuer for a particular asset on Luxo, right? But, then because now you can have multiple other universal profiles which would represent the different parties who provide, you know, those 300 data points, right?

[00:51:36]>> Yeah. Um permissionless >> you have like a fund administrator, you have a proof of reserve attestation, and so on and so on. So, there are so many different parties involved and everyone can contribute it. It's very easy to manage, you know? That's the That's the beautiful thing. It's It's very easy to manage all of those operations. And that's also reason why so often when I'm like I mean, I'm 99% like in the tokenized assets or professional financial space. And when I talk with people on trade shows and conference and so on, it's like everyone is the acting in this very limited way of what they already know from the past 10 years in blockchain, you know? And all of those possibilities we have now due to the tech stack of Lukso, it's like for most people, oh, dynamic NFTs, yeah, I heard about it, you know, there was like this Oracle provider that introduced dynamic NFTs, but it's a simulation of a dynamic It's not really a dynamic NFT.

[00:52:26]And that's so crazy to see that yeah, the the biggest audience in the market so far does not even know what's technically already possible on chain.

[00:52:35]And I mean, for us picking like the Lukso tech stack to building the risk passport, I think was a very good decision because we have now a very good position for how the market is working right now, but again, also for the agent economy. And this is something we anticipate to come rather sooner than later. You can see already some projects in the market, some actors working with it. And just imagine, you have an agent on chain, how should this agent act and interact with tokenized assets? Only based on like the price development or volume? Doesn't make sense. Looking at the price, lots of tokenized assets have like a fixed price, so therefore nothing there is no price change over time.

[00:53:12]Looking at the volume, we are like an institutional space, you might have like a 500 million transaction today and the whole next 2 weeks zero transactions.

[00:53:20]You know, that's normal in this space.

[00:53:22]And therefore, we understood that only using on-chain data is not enough. We need a broader set of data, and therefore we have this kind of multi-dimensional approach to risk scorings and risk data.

[00:53:34]Yeah.

[00:53:35]No, the the ability to, you know, uh upload and attach pre-imposed mint of an asset on Luxo, uh whatever kind of metadata you choose is is, you know, is is a huge unlock. And then, you know, if for for, you know, anyone who >> the management. And identity management, right? Because, you you know, you you think of all these institutions, it's like with the current infrastructure of Web3, it's, you know, one person, you know, creating a wallet. And then, once you give that private key, you're giving away everything, right? Same with your agency. But, but on Luxo, it's like You know, you're going to have the universal profile or or or, you know, if you want to call it a wallet, but it's much more than that, you know, the internet has its own universal profile. It can only update a certain set of metadata. Someone else can transfer funds, but only to a certain address. Another person can only interact with certain, you know, num- small of smart contracts or a vault. Like, it's Yeah.

[00:54:32]>> the granularity of it all is is, um it is a perfect fit.

[00:54:36]>> Currently, in this situation, that like for those financial product structures, we have six or seven parties involved into it. It's not only the token issuer.

[00:54:44]And typically, they cooperate and manage everything off-chain through like an off-chain interface, through emails, whatever. And I see also, definitely, as I mentioned, like identity, access control, and direction, like universal profiles. I mean, it's more talking from a personal perspective. Um Everyone has use case for that, you know? So, I don't want to say everyone should use that. That would be like the wrong framing, but I see for everyone I'm meeting in my day-to-day a use case for utilizing universal profiles in the professional space, you know? Because just of this kind of versatility. And again, it's so easy to manage several people, several parties working together on one project. And yeah, therefore, I think the choice is pretty clear for us.

[00:55:33]And I mean, due to cross-chain messaging, what we have in place right now, it became also very easy to be then on like I mentioned we are now on over 160 chains. So, we are not limiting ourselves to Luxo. We are basically to be maybe also a little bit cheeky. We are taking the best out of it and utilize it for our case and also then be present on Ethereum, on Solana, and so on, and so on, and so on. But we are making use of this rich set of functionalities we have in Luxo. Yeah.

[00:56:03]And I don't know how we would have built it otherwise because the functionalities we need in a risk passport you can and that's also a discussion I faced several time, you cannot do this currently on Ethereum or another network because there is not this technical functionality given. So, therefore it's to have this full set of functionality, that's currently the only choice. Yeah.

[00:56:29]And it turned out also to be uh yeah more or less um yeah easy to get into it. So, I was also surprised how fast we've been able to go to the market. It was really great. And uh yeah, now we are going more into this phase that we are working on the first integrations. Um with DeFi protocols. Um again, we are currently simulating lots of different cases in DeFi to see how it will behave. Also of course to measure cost. I mean, further developing the whole business model behind that.

[00:56:55]Uh running lots of simulations, finding those edge cases, building then solutions for that. So, yeah it's been a really interesting ride uh in the past couple of months.

[00:57:06]Yeah, I know. I'm excited for for your team and I think there's a lot of alignment especially as you're um you know, looking beyond Luxo but utilizing the tech and expanding across chains as you know, we're we're taking our tech and also expanding across chains. It's actually perfect timing as as I mean what I can reveal because this is like public uh we also have our I mean, Agentech ratings is like a big topic also collecting information on chain and it's it's public information.

[00:57:33]We have our first rating agent already deployed on Luxo, Ethereum and base with a universal profile and I think that's really important step that also we have autonomous rating agents collecting data, monitoring assurances and feeding this information, these insights into the risk passport where everyone will then benefit from it. Every protocol has it integrated and therefore we create really a in the future fully autonomous native on chain data aggregation and benchmarking approach and this is again a complete novelty when we look at like the rating and assessment space.

[00:58:10]Right. Right.

[00:58:12]Oh, that that's coming at a really good timing because um not sure if you saw the Luxo agent has been working on a visualizer for all the agents on Luxo and interacting on Luxo but also on other chains as well. So and and other agents on other chains, you know, you know, coming on the way.

[00:58:29]>> this will grow massively and again much faster than we than we anticipated at the moment. Yeah. Yeah. Yeah. I mean it it takes projects like yourself, you know, uh pushing it as well, right? And and the whole community and all the builders.

[00:58:42]Um so no, it's it's great to see and I'm really excited to be following, you know, um all the things you're doing at Particular over the coming months. Um just mindful of time uh and to wrap things up. Um I think this was a, you know, a very insightful conversation opened up a lot of different kind of unlocks in in my mind personally and I'm I'm sure for the community as well and different ideas for for builders. Um Uh in terms of wrapping up, anything uh anything you guys have coming up you wanted to let the community know about or or or to follow in the future? Um yeah, now's your chance before we close off.

[00:59:19]I mean, we are really happy also to see how use cases could be on top built on top of the risk passport. I mean, like, uh an agent was mentioning portfolios only one case. There's much more possible looking at like dynamic calculation like of interest rates and so on. So, therefore, really happy to have any conversation about that.

[00:59:39]But, I think the main message is maybe for the Luxo community in general, DeFi is coming. I'm pretty sure because I see so many use cases that are would be technically currently only possible with this tech stack, So, therefore, I think there's a huge untapped territory.

[00:59:58]And yeah, of course, I think most of the audience also build us. So, I just want to encourage everyone to build to start building. And I think let's say also for me personally, I would just say don't get distracted by any kind of hype or not happening hype on the market because you can see or I have experienced by myself the tech is working. And I think that's the important part.

[01:00:24]Amazing. And and just for one last thing is for myself and also any anyone from the community, what introductions, you know, can the Luxo community make to particular if applicable, that would be helpful in in, you know, driving your vision, you know, um you know, outside of the building part of it, but from a maybe partnership or BD kind of perspective? Yeah, I mean, of course, any kind of DeFi protocol who is looking at tokenized assets is a potential partner for us. So, we're very happy to have these conversations also to find use cases within DeFi protocols, but I think the the baseline should be okay, I understand what are tokenized assets and I have an idea what to do with it. And I think that's the starting point. And yeah, we're very happy to get in those conversations. Also, I will be beginning of June like on June 3rd on the agenda finance summit in New York.

[01:01:19]And also on June 5th, um will actually be on the panel and present on the board summit. It's happening at the New York Stock Exchange. Um so therefore if anyone is there, also happy to talk. You can find me most likely with like a particular P on my on my shirt. Um yeah, anytime it's about tokenized assets and the digital economy, um happy to talk.

[01:01:39]Amazing. Amazing.

[01:01:41]Well, Carson, uh thank you for your time. Really appreciate um yeah, your time, all the insights, and uh looking forward to following. And I'm sure the community as well. So.

[01:01:53]Thanks for having me.

[01:01:55]Likewise. Likewise. All right. Bye, everyone.

[01:01:58]All right. Bye-bye.