Host (2:56)

We were just talking about institutions in the Avalanche ecosystem with Emin a few seconds ago. Talk to me about why you're here at the Avalanche Summit. How are you looking at the Avalanche ecosystem?

Nikhil B. Sharma (3:09)

So we look at Avalanche ecosystem through our own prisms and those prisms come from the experiments that we've done with the AVA Labs team, the AVA Cloud team, across two years. So our first experiment was two years ago, like end of 2023, where we tested out fund tokenization and how funds sort of sit in model portfolios. And we did it cross chain again. This goes back to the question that you asked in terms of how do we. We're doing a bunch of things in our own backyard. How do we connect with ledgers that are outside of our backyard, which is what we tested out again for becoming a general availability product. There are several layers that we will need to pare through. But then that's when we started out our first journey with Avalanche. Morgan is an ally we do work with, talk to her quite often in terms of what we can prove out. What that led to is our second experiment at the end of last year where we tested out a privacy solution cloud where we were testing out a bunch of privacy solutions in line with our thesis in terms of if this were to go, if our solutions were to sort of extend into universal ledgers, there are some things that need to be ironed out. So then we tested out Everse as one of the solutions. So that's sort of how we look at the Avalanche ecosystem now in terms of coming at it from our own theses, in terms of where our products would play, how our products would play in certain sort of markets, certain ecosystems, and where Avalanche could sort of collaborate with us.

Interviewer (4:34)

When you think about the financial opportunities of digital assets at speed and at scale, we all know that we are playing in more digital money today than we were yesterday. We are going to be only playing in the future. And even more when we think of the world in the global nature that it is. I can imagine yourself saying there is so much opportunity out there as we bring more and more people into, into kind of creating this financial inclusion opportunity. Do you think that happens on chain? Do you think it happens in branch? What's your thesis on utilizing digital assets for tomorrow's generation? The younger ones coming in, those who may not traditionally have had bank accounts?

Nikhil B. Sharma (5:17)

Yeah. And when you say, does it happen on branch, just to be clear, you.

Interviewer (5:21)

Mean like physical branches or within a JP Morgan framework?

Nikhil B. Sharma (5:25)

Yeah, I mean, like, we definitely have a view in terms of how it happens on, like, single ledgers, multiple ledgers, and universal ledgers. And we think it's an incremental journey in terms of where we are and how we get to that stage. That said, like, we have done experiments on, like, universal ledgers as well in terms of what it takes to kind of do a real transaction for the new generation in terms of what it would take if they were to transact real value on universal ledgers. So this is going back to 2022, when again, in a bank construct, I'm not talking about retail bank accounts here, but within an institutional construct where our bank is trading with a counterparty, we did a trade on a blockchain, which was live on a DEFI protocol. So that's where we sort of realized as to what really works, what really doesn't. So for anything where we would have to put something on a universal ledger, we would have to kind of put those gates, those filters in place, governance in place, to kind of do a trade which is in compliance with how we would have a product going out within the traditional JP Morgan infrastructure. So the way I would see it is, like, we definitely believe in the technology. And this comes top down, not because I have an axe to grind here. So this comes top down in terms of the vision, in terms of the fact that this technology can help the ecosystem, in terms of how we expand it to the aspects that you said that would really depend on use cases, what we can enable, and at what scale.

Host (6:43)

I want to come back to the privacy conversation for just a second. You were talking about the experiment you did with Ava Cloud, and I just love to hear from an institutional perspective, what are the privacy concerns even in these walled gardens we're talking about? Right. Because what we're talking about is a little bit different than when we're talking to DEFI protocols, we're talking to degens. Privacy is obviously a concern in those use cases, but I believe in a different way. Talk to us about how institutions are looking at privacy and what's important to them as they experiment with blockchain infrastructure.

Nikhil B. Sharma (7:14)

Yeah, great question. So when we started out with our journey of why we're looking at privacy. This was somewhere in the mid 2024 when we started looking at many institutions sort of jumping into the fray and we started looking at tokenized sort of wrapper products coming on chain. When you go on to tokenized wrapper products, you can basically see the investor register right there. And if you had good sleuthing skills, you can basically go back and see guesstimate, not actually assign it to, but you can guesstimate as to who that address could belong to, what they've done in the past, etc. So when we look at that and look at it in parallel to what happens in the traditional infrastructure, there's sort of four prisms that institutions sort of look at from a privacy confidentiality standpoint. So the one is anonymity, where my personally identifiable information should not be on chain, still not on chain. But you can sleuth enough to kind of see what actions have taken place from that address, who's being funded by, et cetera. Then there's confidentiality, which is my transaction balances my ownership. My transaction record shouldn't be in a place where I can actually put it through an LLM or whatever and gauge what the patterns are. Then selective disclosure in terms of how I want to share my information, that should be up to me. I don't want to share all my information. I can share a part of my information, prove to you who I am, then auditability. If I want to open up a part of my transaction information for you to be able to audit, I should be able to give you that authorization in a selective way. I don't want to open it up to everybody. At the same time, I don't want to be very closed in terms of nobody can see it. So that's what institutions look at. So when we started looking at privacy, we started with the thesis that enterprise grade privacy, identity and composability, which is what Project EPIC stands for, that would need to be on chain for institutional flows to be comfortable to kind of come onto a public permissionless chain. We started with the thesis and we sort of ended with that conclusion that there is no one size fits all. There are several solutions, AVSC is one of them. We did look at them and we liked it in terms of like among the other solutions, which we liked as well. We liked AVSC as well because it ticked some of the boxes that we were looking at, like how do you bring in privacy preserving digital identity and how do you sort of connect it with like business flows? So the way we did it we basically plugged in into institutional flows. How does a fund subscription work? How does the entire flow work in terms of an investor interacting with a fund? And then we looked at all of these solutions and how they sort of plug in. That's what we did. That was our collaboration.

Host (9:48)

All right, Nikhil, we are going to have to leave it there. Thank you for joining us backstage at the Avalanche Summit and I'm sure we'll see you around the event.

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