← The Digital Executive
The Digital Executive
Tokenizing Gold and Real Estate Through DeFi Innovation with CEO Kevin Rusher | Ep 1042
00:10:08
Loading summary
Transcript18 lines
- [00:00]
A
Foreign.
- [00:09]
B
Welcome to Coruscant Technologies, home of the Digital Executive Podcast. Welcome to the Digital Executive. Today's guest is Kevin Rusher. Kevin Rusher brings a wealth of experience to rac with a strong background in finance, accounting and the crypto industry. Active in cryptocurrency since 2017 and working full time in the space since 2020, Rush Russia combines extensive traditional finance knowledge with a passion for decentralized innovation. RAC is a pioneering defi platform that transforms traditional finance by tokenizing real world assets, including real estate and gold. With energy and more on the roadmap, the platform allows users to borrow against their holdings at competitive rates, while also offering investors access to high value arbitrage opportunities. With a commitment to compliance and innovation, Rack serves as a bridge between traditional finance systems and decentralized finance, empowering users to participate in real world assets in a fully decentralized way. Well, good afternoon, Kevin. Welcome to the show.
- [01:05]
A
Hey Brian, thanks for having me. Pleasure to be here.
- [01:08]
B
Absolutely. I appreciate it. My friend. Traversing just a couple time zones across. I'm in Kansas City, you're in up there in Northern California. Again, appreciate the time. I know it's hard to traverse busy schedules and the global time clock sometimes. So, Kevin, let's jump into your first question. You've been active in the cryptocurrency space since 2017 and transitioned to full time in 2020. Could you share what initially drew into the world of crypto and decentralized finance?
- [01:35]
A
Yeah, for sure. I originally was an accounting and finance student. 2017, I had to write a third year fintech paper and they gave us a list of topics and the first topic was A, which was AI, and it said that corporate audits would be replaced by AI in the 2000 and 30s. And I was like, ooh, that doesn't sound too great. So I got really far down the list to B and saw bitcoin, wrote about it, it was orange pilled, became obsessed. I thought I was going to be a crypto accountant and Defi Summer kind of came around and just left the crypto and got rid of the accounting part of it. So yeah, I've been in the space full time since 2020, which is kind of around defi Summer and haven't looked back since.
- [02:16]
B
That's amazing. Obviously, you know, when you're in that part of your career, your life journey, you kind of figure out, whoa, they're predicting that my job's gonna get replaced, I better dive in and do some research. And you obviously did some great research to get into this space because we embrace it. We've probably had 80 or 90 guests that like you are in this space specifically developing daos, companies, whatever you wanna call it. But we embrace blockchain, DeFi, Web3, you name it. Our platform's built on Web3 too. So Kevin, jump into your next question. RAC focuses on tokenizing physical real world assets like real estate and gold. Can you explain the process of tokenization and how it benefits both asset owners and investors?
- [02:58]
A
Yeah, for sure. So the process is a little bit different for both. Starting with real estate, the way that we do it is we are partnered with a protocol called Instruxy who focus on asset tokenization. So the real estate would be kind of moved into a corporate vehicle where it's safe from creditors, US banks, anything really. So just to make sure that token holder is safe. And what it allows you to do is basically bring these assets on chain. And what that does is it unlocks liquidity for these asset owners, allows them to do things such as take loans through Defi or even mint stablecoins potentially. So the way we do that is we transfer that value off chain to on chain through chainlinks, oracles, and the way we do that is through biannual valuations on the property as well as property estimations. Because real estate's a slow moving asset, it doesn't really need to be updated like a weekly or daily thing as you see with a lot of other RWAs or even tokens in general. And the way that the gold works is the gold will go through like an earnest and young or even a third party audit. And from there it's brought on chain and monthly it will go under bureau veritas audits to basically verify the gold and how much has been produced. So that's how the process of bringing it on chain and how you bring that value on chain. And what it does is unlocks value for asset owners liquidity and for investors it allows like a global reach for institutional grade investments through DeFi, basically opportunities people normally would not have. Through the power of decentralized finance, they can access these institutional grade investments.
- [04:35]
B
That's amazing. And I love how this concept of tokenization came about just a few years ago, especially around real world assets. We've had several guests like yourself that run I guess at a dao or a company in this space that actually do this tokenization of real world assets. And I think it's awesome. So thank you for sharing that, especially for our audience who loves this stuff. Kevin, your platform recently launched its testnet with 235 million in gold backed deposits from one of North America's largest gold reserves. Could you provide more details about this initiative and its significance for racc?
- [05:10]
A
Yeah, for sure. So kind of the way this works is the gold is actually in the ground currently. So it's valued at 20% of the spot value. So it's about 1 million ounces of gold. So roughly 3 billion of spot value when it would be sitting in a bank vault. So what's happening is it gets valued at 20% of spot. So let's call it 600 million. And what is happening is we are bringing that reserve on chain and we will be minting a stablecoin backed by the gold reserves, which we will then deploy to RAC and the broader defi ecosystem. And what's happening there is we're not looking to kind of just push a stablecoin into the market. We're really looking to generate yield off of these kind of in ground assets essentially. So what happens out of there is a portion of the yield would go to the asset owner and then a split would be given to governance tokens based around this ecosystem. And the point is, is as they extract and refine this gold, the token backing the stablecoin will increase in value as it reaches parity with the spot price of gold. So they'll be able to mint more and more stable coins which will then be deployed through rack to the greater defi ecosystem to generate yield.
- [06:29]
B
That's amazing. I love that concept. And I didn't even know this, but this is great. I'm glad you shared with our audience. Gold in the ground versus gold in the bank. Right. And you mentioned it's about 20% of the spot value. But I like the fact that as they mint the real world gold, right, that gives more opportunity, growth, you know, investment income essentially. Right. As they mint these digital assets. So I really appreciate you sharing that and I learned a little bit more tonight, so thank you.
- [06:54]
A
No worries. And it's actually, it's really unique because gold is traditionally a static asset that doesn't produce yield. So we basically found a way to turn it into a productive asset. But at the same time, global financing for precious metals mining has dried up because people are investing in rare earth metal mining. So there's a lot of gold mines and precious metal mines in the world that are struggling to find financing. And this is a really perfect solution because they can bring their reserves, mint a stablecoin backed by it and take some of that minted stablecoins to start their operations and extract the gold.
- [07:27]
B
That's awesome. Thank you for sharing that. That's really cool. Kevin, the last question of the evening here. With the recent surge in gold prices surpassing 3,000 per ounce, how, how do you envision the tokenized gold sector impacting the broader cryptocurrency market in the coming years?
- [07:43]
A
I think to touch on what you mentioned before, kind of back in the day, we always like 2017, we always talked about what would happen as blockchain swallows all the assets of the world and it gets tokenized. I think we're kind of seeing that now. I mean, Rack is not the only one tokenizing gold. You have Paxos, you have tether doing the same, you have uranium on chain. I really believe that it's not even just gold sector itself. You're going to see tons of precious metals, rare earth metals coming on chain and being deployed. It's really interesting. Just because you bring an asset on chain doesn't mean it has liquidity. You kind of have to create the liquidity around it. But what we're seeing is traditionally more illiquid assets can be brought on chain and growing the overall value of defi and providing stability because that's what's definitely defi really needs right now is secure and stable assets that are predictable, unlike the volatility that you'll experience on taking a loan against eth or if you're really crazy, some other altcoin.
- [08:40]
B
Thank you. I appreciate that. You just mentioned uranium. I didn't even know that was on chain. But yeah, over the future, over time, and I know this is quickly becoming more adopted across the globe is many precious metals are coming on chain here in the near future. But it is important you highlighted, I think the most important part of this is this growing this overall security and stability and liquidity of this is by tying these digital assets to the real world assets. And I think that's important, that there's going to be a huge market for this in the very near future.
- [09:09]
A
I was going to say we've been praying for this over since 2017. Institutional adoption is here. The need to create structured portfolios on chain is becoming more evident as all these institutions are deploying capital or products. So the need for stability and real world assets is only going to increase.
- [09:28]
B
Absolutely. And we can see it now. And when we, we start to innovate around these sorts of things, we can offer alternatives to inflation and centralization of the current banking system. Right. We can actually give people a choice to kind of get out of this rat race, as I like to call it. So thank you very much, Kevin. It was such a pleasure having you on today, and I look forward to speaking with you real soon.
- [09:51]
A
Yeah, thank you so much. Was such an honor to be on the show today. And, yeah, thanks for having me. Would love to come on again. And thank you to the audience for listening to me as well.
- [09:59]
B
Bye for now.