Cap is proud to announce the Cap Stablecoin Network (CSN) with @PayPal USD being our initial launch partner. The deal marks a watershed moment for the ecosystem as we gear up to launch cUSD, the first stablecoin with credible financial guarantees. Here's why it matters:

I know everyone is really bulled up on the Robinhood announcement and tokenized equities, and not to be a bear, but the conversation seems to lack a lot of nuance. I'm a long term bull but I expect near term expectations are WAY too high. So lets take a critical look. So, how do these products actually work? Using xStocks as an example (and this looks to be how the HOOD product will approximately work too), you have an SPV out of Jersey that is regulated in Lichtenstein. To mint/redeem you have to be KYC'd with Kraken (and soon other exchanges) and that token gives any holder who KYCs the legal right to redeem for the cash value of their equity token at the OFFCHAIN price (not what it trades at on chain). Dividends are reinvested in kind / token doesn't rebase and voting rights go to the SPV. Once you have the token you can send it to any wallet / use it in defi / etc. Notably, when you mint the token the SPV then goes and acquires the share as collateral. They can (mostly) only acquire shares during market hours. So all after hours / weekend trading will require a market maker to hold the price risk (which will be very hard or impossible to hedge) until they can mint/redeem - but even then redemption fees are at a quite high (for MM standards) 25bps. It's also true that there is a lot of regulatory risk for any defi protocol and market maker who may end up serving a US user who buys this onchain (far more than your other coins). This means a few important things, most importantly - Market makers, because they will have to take massive amounts of weekend and after hours price risk, will have to blow out spreads that will make trading these things outside of market hours untenable for most professional traders and firms. Those firms will also, likely, pull liquidity in times of market stress on weekends and after hours. Which, if these things permeate defi lending and derivs, will create major cascading liquidation risk. Also, because you only have legal right to the cash value of the offchain price less 25bps redemption, you will see quick convergence back to the offchain price when equities markets open. That means when people buy in times of that low liquidity euphoria on weekends/after hours but the equities market then opens lower than token buyers expected, you will see quick rapid losses at open which will primarily be born by retail (also potentially gains, but less likely due to sophisticated actors). Functionally, that means these are just not good products. They absolutely serve a use case in terms of providing access to otherwise underserved markets. That includes crypto native traders who don't want to kyc/aml (for whatever reason) at a brokerage. Also ease of transfer, fractionalized shares and better reconciliation. But only for a small subset of retail. They cannot serve a sophisticated, real, and global equities market. And they likely won't even serve the needs of the professional crypto traders who know they can get significantly better pricing and less risk elsewhere. This will be especially true on the weekends (after hours a bit easier to figure out) and onchain vs. in Cefi. Long-term, as primary markets come onchain, collateral mobility moves to tokenized products, and traditional takers can fix their (pretty outdated) tech stacks, you'll see equities move in real size onchain and liquidity increase dramatically. There will be lots of headlines, but these existing products are likely going to be a disappointing speed bump in the trajectory we are on.