📉 CeFi’s downfall: According to SBF, CeFi’s downfall comes down to one thing – lack of transparency.  

• “When you look at some of these CeFi companies that were blowing up, there is no transparency around any of it,” he said. “There was no way to know what was going to happen until it was too late.” 

• SBF explained that unlike DeFi, where there is a clear answer to rehypothecation (“the practice that allows collateral posted by, say, a hedge fund to its prime broker to be used again as. collateral by that prime broker for its own funding” – ), CeFi leaves more questions than answers. “The answer is, I don’t know, some amount, maybe a lot, maybe not for who knows, it could be anything.” 
• “There are really powerful things you can do in that world, but there is a little bit of a playing with fire mechanic here.” SBF warned. “The worry is that you effectively end up with way more leverage than you thought you had, and not enough time or space left to clean it up when the time comes.” 

🪙  The path to tokenization: Tokenizing traditional banks could completely reshape financial markets, free up billions of dollars of collateral and eliminate the settlement risk – and according to Pal and SBF, we’re on the path towards tokenization. 

• “I think that we are on an actual path forward to creating regulatory frameworks for tokenized financial assets,” SBF shared. “But tokenizing is only helpful if several different platforms all use and agree on the same standards and same system for tokenization.” 
• “All the banks are deep into this. They understand that how much collateral it frees out of the system is enormous, and it gives them the ability to use leverage elsewhere,” Pal said. 

• SBF shared Pal’s excitement but warned that the process may take a while. “They absolutely recognize that fact. This is not lost on them. They want to do what they can to build out with this rather than getting caught flat footed. And that doesn’t mean it’s all going to happen overnight – this is still a real process.”  

👥  The future of crypto: 300 million people make up the current crypto network – so how do we break through and reach billions? 

• “I think that there are some philosophical things going on here, but much more than that, it’s execution,” SBF noted. “There has to be really beautiful user experiences before this space is going to be able to scale to billions of people.” 
• “Regulatory clarity will also help get more institutional access and trust,” SBF explained. “Then starting to build out some real use cases in a useful way will go a really long way towards getting the ecosystem to where it needs to go.” 

👀  What to watch: Solana Labs recently announced that they’re building a Web3 mobile phone with specialty crypto wallet functions. Will it become the next iOS or Android stack? 

• “I think like payments – actually getting them down really well, both domestically and internationally – is a huge, huge opportunity area.” SBF said before sharing his interest in consumer market structure. “Getting to a place where the average consumer has equitable access to financial markets compared to, you know, the biggest institutions is a huge, huge opportunity, and I think that crypto rails will really help.” 
• Pal and SBF both shared their excitement for the upcoming Solana Mobile, “It’s irrelevant whether the mobile phone takes off itself, but whether the stack can become the iOS, or the Android stack for Web3. We’re still in a world where you have to have different wallets for different things, which is kind of crazy.” Pal said. SBF agreed, “getting to the point where you have a seamless wallet experience on mobile is a huge leap forward.”