Athena enters the treasury business, innovating USD asset solutions for crypto fund flows, with regulatory tailwinds supporting growth.

Author: Hive Mind

Compiled & Edited by: Blockchain in Plain Language

Broadcast Date: 2025.07.26

Podcast Original: Hive Mind

[Host]

Jose Madu, host of the Hive Mind podcast, active in the cryptocurrency and fintech space, skilled at uncovering industry insights.

[Regular Guests]

Clefus Paribus, Chief Analyst of the Institutional Research Department, focusing on macro analysis and data-driven insights in the cryptocurrency market.

Jan Lieberman, Managing Partner at Delphi Ventures, a veteran in the venture capital field, focusing on blockchain and decentralized finance (DeFi) projects.

Duncan Zhang, Venture Researcher at Flood Capital, specializing in early-stage crypto project investments, adept at assessing technology and market potential.

[Special Guest]

Guy Young, Founder and CEO of Athena

The founder and CEO of Athena joins the Hive Mind podcast to discuss the dynamics of the crypto market, focusing on Athena's USD assets ($360 million, with 72% in cash), addressing liquidity issues. The USD stablecoin has an annualized yield of 18%, leading Circle through basis trading. The Genius Act aids Athena's compliance, while Tether may push for a U.S. version of USDT. Market momentum is driven by treasury strategies, with Layer 1 valuations being too high; MEW's market cap dropped to $2.8 billion after raising $1.8 billion, necessitating innovative social speculation to revitalize.

1. Athena's Stablecoin Innovation and Market Insights

Guy Young: You made a significant announcement this week regarding USD assets, officially entering the treasury-related business. Can you provide some background on this move and why it is significant?

Guy Young: Of course, Jose. Athena began planning this business around December or January of this year. At that time, the market's enthusiasm for such assets was far less than it is now, with similar projects emerging almost daily. We observed Circle's strong performance in the public market and realized that the demand for such assets in traditional financial markets far exceeds supply. Traditional investors, especially institutions managing large funds, are eager to find investment themes that combine crypto characteristics with stable returns, which presents us with a great opportunity. From a macro perspective, over the past 18 months, I have been concerned about the capital flow in altcoins within the cryptocurrency market. The peak total market cap of altcoins in 2021 and 2024 was nearly flat, hovering around $1.2 trillion. This is a strong signal to me that the global willingness to invest in high-risk, speculative tokens is limited. The crypto industry needs to mature and present assets to traditional equity market investors in a more regulated and transparent manner. Even providing token exposure at 1x net asset value (NAV) is more attractive than having no access to these markets at all. The USD assets we are building not only cater to the high demand of traditional markets but also effectively alleviate the long-standing liquidity bottleneck in the crypto market, making it a win-win strategic match.

Jose Madu: That makes a lot of sense. Sorry, I forgot to ask you to introduce yourself. Could you briefly introduce yourself and Athena? We might edit this part to the beginning later.

Guy Young: No problem. I am Guy Young, and I founded Athena two years ago. Athena focuses on issuing two types of products: synthetic USD and regular stablecoin USDTB. The USD is our core product launched 15 months ago, which has grown rapidly, with supply increasing from zero to $6 billion in less than 12 months, and is now close to $7 billion. The supply of USDTB has reached $1.5 billion, setting a historical high. Our goal is to provide efficient and stable value storage and trading mediums for both crypto and traditional markets through innovative financial engineering.

Jose Madu: Haha, sorry for the disorganization; I just got back from a music festival, and my mind isn't fully online yet. This part might be edited back in or kept, depending on the mood. Back to USD assets, this project is exciting. When did it start trading? How much funding was raised? Athena Labs' tweet mentioned this is the project with the highest cash-to-asset market value ratio; could you elaborate?

Guy Young: I completely understand; the afterglow of a music festival can be a bit disorienting. Regarding USD assets, the total project scale is about $360 million, of which $260 million is cash, making the cash ratio as high as 72%, far exceeding the industry average. Many similar projects are essentially just tools for exiting liquidity, where investors quickly sell tokens in the public market after investing, while our goal is to bring in fresh capital to address the liquidity pain points in the crypto market. The funds raised by Athena account for 8% of the project's circulating market value, used to purchase tokens in the public market, which is much higher than the second-ranked Hype project (less than 2%). This ratio is extremely prominent in the market, reflecting our strong support for the underlying assets. The strategic deployment of cash will have significant ripple effects, enhancing the overall value stability of the tokens. For example, $500 million in cash has limited impact on large-cap assets like Ethereum, but for our target assets, it is enough to drive positive changes in market dynamics.

2. Competition in the Stablecoin Market and Athena's Differentiated Strategy

Jose Madu: That's fantastic. The success factors of this project are very appealing, especially the structural design, which is clearly more streamlined than many competitors. You quickly redeploy cash into spot assets, creating a flywheel effect that makes the value appreciation on the equity side very attractive. Additionally, stock demand is amplified by increasing the number of tokens per share, similar to how MicroStrategy creates "earnings" by increasing its Bitcoin holdings per share. In the current environment, being able to purchase assets from the foundation at a discount is indeed a highlight. The demand for pure equity exposure in stablecoins is strong, and the regulatory environment is becoming increasingly friendly, such as the passage of the Genius Act and Circle's strong market performance. Can you discuss the challenges Circle faces, such as the impact of declining treasury rates on your business? When the Federal Reserve lowers interest rates, financing rates in the crypto market often rise, which I believe could trigger a capital rotation from Circle to Athena. How do these three factors—structural optimization, regulatory tailwinds, and capital rotation—shape your investment attractiveness?

Guy Young: This is a very comprehensive question that covers the core competitive landscape of the stablecoin market. The use cases for stablecoins are extremely diverse, ranging from collateral for trading on centralized exchanges to dollar payment channels in developing countries, covering payments, remittances, savings, and more. I believe the future trend is that each issuer will deeply cultivate a niche market, pursuing a tenfold advantage over competitors rather than trying to be an all-encompassing solution. Athena's strategy is very clear: we focus on areas where we can significantly outperform competitors, such as savings rather than payment scenarios. The USD, as a structurally higher-yielding dollar asset, is more attractive in savings use cases compared to non-yielding assets. This advantage can also extend to other scenarios, such as being used as collateral for perpetual contracts on centralized exchanges or embedded in DeFi protocols to create new financial products. This is Athena's differentiated positioning and the cornerstone of our rapid growth.

In 2024, the average annualized yield of USD reached 18%, four times that of Circle's interest income. If we adjust asset scale by yield, Athena's $7 billion supply is equivalent to $28 billion, comparable to Circle's size. This indicates that you don't need a massive balance sheet to compete with giants through an efficient yield mechanism. Regarding competitors, we view Tether as a strategic partner rather than a direct rival. Many may not realize that 70% of the perpetual contract market in centralized finance (CeFi) is denominated in Tether, and Athena's $1 collateral roughly translates to a $0.70 increase in Tether supply. The reason Tether does not provide yields is that the market pays for its yields through futures and basis trading. Athena's innovation lies in productizing the use case of capturing Tether's basis, creating a yield-enhanced product. The collateral we hold is primarily Tether, which not only supports Tether's growth but also strengthens our market position.

As for the headwinds Circle faces, declining treasury rates will indeed compress its yield space since its USDC is primarily backed by treasuries. When the Federal Reserve lowers interest rates, financing rates in the crypto market often rise, which is favorable for Athena's basis trading strategy and may attract more funds from low-yield USDC to USD. The improvement in the regulatory environment, especially with the passage of the Genius Act, has created a clearer compliance framework for stablecoins, further enhancing our attractiveness. The synergistic effect of these three factors—optimized project structure, smooth regulatory environment, and potential for capital rotation—makes Athena an ideal choice for both traditional and crypto investors.

Jose Madu: Listeners may be interested in Athena's yield mechanism; could you briefly explain how you generate yields?

Guy Young: The core mechanism is cash arbitrage or basis trading. We go long on spot assets on one side while shorting futures or perpetual contracts on the other, capturing the speculative premium in the derivatives market. The financing rate in the crypto market can be seen as the capital cost of going long; the market is bullish in the long term, and investors are willing to pay a premium for leveraged long positions. Athena locks in this premium through refined trading strategies. To draw an analogy, stablecoins are essentially a form of substitution: holding Circle's USDC is akin to lending money to the U.S. government in exchange for a low-yield IOU; holding Sky's dollar assets is like over-collateralizing in Ethereum in DeFi; while Athena's USD provides financing for long positions in CeFi, with yields being higher due to the risk of the borrowing counterpart and market demand.

3. The Evolution of Basis Trading and the Influx of Institutional Capital

Jose Madu: That was a clear explanation. Compared to 2024, basis trading has significantly narrowed with the explosion of Bitcoin and Ethereum ETFs in 2025. During the 2021 market cycle, the basis for mainstream coins reached as high as 50-60% for several months. Now, the more liquid futures market, professional fund managers, and ETF participation have greatly compressed the basis. How is Athena responding to these changes internally? With the launch of long-tail assets like the Solana ETF, as institutional capital further enters, what do you think the future trend of basis trading will be?

Guy Young: This is a key question that reflects the accelerated integration of the crypto market with traditional finance. The capital pools for ETF and basis trading on the Chicago Mercantile Exchange (CME) are completely disconnected from those in the crypto market. Traditional hedge funds like Millennium cannot directly invest in crypto trading platforms due to the need for AA-rated custodians. The credit risk of CME is almost zero, attracting a large amount of traditional financial capital. In 2024, the average basis on CME was 6.5%, which is 150 basis points higher than treasury yields, while Athena's USD yield reached 18%, creating a gap of 1000 basis points. This is because CME requires full cash collateral, while the crypto market allows portfolio margining, resulting in higher leverage efficiency.

Athena's strategy is to serve as a bridge for institutions entering the crypto market. Many hedge funds choose to invest in Athena because USD is not only used for staking (sUSD) but also acts as a trading medium in scenarios like automated market makers (AMM) and order books, with staking rates never reaching 100%. This ensures that Athena's yields are consistently higher than the returns investors would capture by themselves through basis trading. Although the basis may compress with the influx of institutional capital, we believe Athena's efficiency advantage will attract more funds. Critics point out that the basis has dropped from 60% since our launch, which is inevitable, but it is precisely Athena that has driven this trend. We are expanding our scale while compressing the basis, which is a natural law of financial markets: discovering excess spreads (Alpha) and then requiring hundreds of billions in capital to bring it down to reasonable levels. Athena's goal is to reduce the capital cost in the crypto market from 20-30% to the 10-12% recognized by traditional finance, creating a more sustainable ecosystem for the industry.

With the launch of new products like the Solana ETF, more long-tail assets are entering the institutional view, intensifying competition in basis trading. However, due to the credit risks and custody restrictions in the crypto market, the basis differential between CME and crypto trading platforms will persist in the long term. Athena's task is to optimize trade execution, maintain yield advantages, and establish closer cooperation with traditional financial institutions to ensure we dominate in this evolution.

Jose Madu: Athena's reduction of financing rates may mask the level of speculation in the market, especially regarding BTC and ETH. How do you view the broader market leverage situation?

Guy Young: You're right; Athena's presence has indeed made the market hotter than before, especially for BTC and ETH. Observing the financing rates on Hyperliquid is a good approach, where rates are around 25%, significantly higher than Binance's 11%. There are two reasons for this: Hyperliquid's retail capital flow is more natural, with lower institutional participation; secondly, it does not support portfolio margining, resulting in lower leverage efficiency. Hyperliquid is unaffected by Athena, reflecting the true retail speculative enthusiasm and serving as an ideal reference for gauging market heat. Athena indirectly stimulates leverage demand by lowering financing costs, but it also makes the market more efficient. We need to closely monitor this dynamic to ensure it does not trigger excessive speculation.

4. The Genius Act and New Regulatory Opportunities for Stablecoins

Jose Madu: This week, the crypto space witnessed a milestone event—the passage of the Genius Act, the first federal law specifically designed for stablecoins. You announced a partnership with Anchorage, seemingly becoming the first stablecoin project compliant with the act. Can you elaborate on the Genius Act, the details of the partnership, and its significance for Athena?

Guy Young: The Genius Act provides a clear regulatory framework for the stablecoin industry, marking a critical step in the U.S. acceptance of crypto assets. Our collaboration involves transitioning the issuance of USDTB from an offshore British Virgin Islands (BVI) entity to direct issuance by Anchorage. Anchorage is the only crypto asset custodian in the U.S. with a federal banking charter, and their "Genius as a Service" product offers compliance solutions for issuers. Athena adopts a dual-track strategy: USDTB is issued through Anchorage, compliant with the Genius Act, and can be used in U.S. payment scenarios; USD continues to serve the offshore DeFi market, free from U.S. regulatory constraints.

This strategy reflects our insights into the global market. The U.S. market has immense potential, but competition is fierce, with traditional digital payment tools like Venmo and PayPal deeply entrenched, and money market funds competing for yield space with stablecoins. In contrast, the use cases for stablecoins in offshore markets are broader, especially in developing countries, where dollar stablecoins are preferred for payments, remittances, and value storage. Tether's success proves the viability of an offshore strategy; they never directly serve the U.S. market yet have become the largest stablecoin globally. We are excited about entering the U.S. market, but offshore DeFi remains our core growth engine. The partnership with Anchorage positions us advantageously in terms of compliance and market expansion, laying a solid foundation for Athena's long-term development.

Jose Madu: Will Tether enter the U.S. market due to the Genius Act? They have previously stated they would not.

Guy Young: I recently saw reports that Tether might issue a U.S. regulatory-compliant version of USDT. Although this has not been officially confirmed, it aligns with our dual-track strategy: launching compliant products for the U.S. while retaining the advantages of our core products in the global market. Tether's cautious stance stems from the uncertainty of U.S. regulation, and the passage of the Genius Act may prompt them to reassess this position.

Jose Madu: Will the new token lead to liquidity fragmentation? Will the U.S. and international markets completely diverge?

Guy Young: Fragmentation is inevitable. U.S. users should not trade on offshore platforms and may use local tokens on compliant trading platforms like BN US. A similar situation has already occurred in the EU, where Binance introduced a "futures credit" mechanism that automatically converts user funds into compliant assets. While the operation is somewhat complex, this is a trend driven by regulation, and the global market will form a binary structure of U.S. and non-U.S. markets.

Jose Madu: The stablecoin market is booming, with both large companies and startups having their strategies. Which areas do you think are overvalued or undervalued?

Guy Young: I am skeptical about the prospects of new issuers challenging giants like Tether and Circle. The stablecoin market is highly commoditized and must meet three conditions: dollar denomination, ultra-high liquidity, and sustainable returns. New issuers will struggle to reach Tether's $100 billion daily trading volume on day one, and treasury-backed stablecoins face a race to the bottom in profit margins. Circle has exacerbated this trend by sharing profits with Coinbase. Tether established a moat due to the early market vacuum, and its business model is not replicable. New issuers claiming to share 90% of profits have unsustainable strategies; they need a $100 billion scale to become attractive investment targets. In contrast, infrastructure projects like Tron are performing well, with daily trading volumes in the millions of dollars and a solid model. New projects like Plasma are trying to get a piece of the pie, but shaking Tron's position is extremely challenging. An undervalued area may be compliance solutions, with institutions like Anchorage playing a key role in the regulatory wave.

Jose Madu: The Genius Act may allow banks to issue stablecoins backed by the Federal Reserve's $3.3 trillion to $3.5 trillion reserves, enhancing liquidity. What are your thoughts?

Guy Young: I am not very familiar with the specific terms, but your thinking is quite enlightening. Bank deposits are central to credit creation; if they all convert to stablecoins, the economic credit system could collapse unless new mechanisms are introduced to balance it. The dual nature of stablecoins—being able to remain in banks while also circulating as currency—will greatly enhance liquidity. The U.S. could use stablecoins to finance short-term treasuries, alleviating fiscal pressure, but regions like the EU are concerned about funds flowing out of banks, impacting the monetary system. Once the scale of stablecoins reaches a certain level, national authorities may remain vigilant about this trend and even take restrictive measures.

5. Market Momentum and Valuation Controversies in Layer 1

Jose Madu: If $3.5 trillion in reserves turns into stablecoins, some may flow into Bitcoin, leading to an extremely bullish market. Recently, the ETH/BTC ratio broke 0.03, with Solana showing mixed performance. At what stage of the market cycle are we? Jan, you go first.

Jan Lieberman: Market momentum is very strong, largely driven by treasury strategies. These strategies attract a significant amount of capital, forming a sedimentary capital pool that is not easily withdrawn. The proliferation of brokerage accounts has also made it easier for traditional investors to participate in the crypto market. The Genius Act could release $3.3 trillion in bank deposits, and Bessant predicts that future demand for stablecoins could reach $3.7 trillion, which is a long-term positive for the crypto market. However, short-term volatility is more driven by market sentiment and capital flow. Personally, I believe chasing treasury instruments at high premiums is unwise, but narratives from influencers like Tom Lee have fueled market enthusiasm, and this trend may continue for a while.

Guy Young: I am long-term bearish on ETH and other Layer 1 (L1) assets, believing they are among the most overvalued assets in financial history. In the short term, the narrative for ETH has shifted from competing for user activity with Solana to competing for traditional financial capital with BTC. As long as related instruments trade at 2.5 to 4 times net asset value, the market will not easily decline. However, if the multiple slides from 1.5 times to 1 time, it may signal the end of the cycle. A slowdown in new instruments or existing instruments failing to raise capital at high premiums will trigger a market adjustment. Currently, a clear group of buyers supports market momentum; Michael Saylor just announced increasing the issuance scale from $500 million to $2 billion, and market enthusiasm remains high. National-level buyers have not yet publicly appeared, but they may be quietly positioning themselves, and once fully invested, it could trigger a new round of increases.

Jan Lieberman: If L1 is overvalued, will the altcoin market collapse entirely?

Guy Young: Most altcoins do rely on the performance of L1, but Hyperliquid is an exception; it drives growth through cash flow and has freed itself from pricing dependence on ETH or Solana, appearing more like an equity-like asset. Altcoins need to liberate themselves from the Beta role of L1 and develop independent business models. In the future, five to ten projects with real revenue, users, and products will enter the equity market, priced at standards like 10 times earnings, decoupling from L1 valuations. This is a painful transformation, and BTC's dominance may rise to 90%, while other L1 valuations should drop to one-tenth of their current value. The success of Hyperliquid, Coinbase, and Robinhood indicates that equity-like projects will stand out in the next cycle.

Setters: I partially agree but also have a different view. If Sui performs poorly in this cycle, will the argument for L1's overvaluation still hold? ETH and Solana have rebounded since their lows at the end of 2022, but other L1s have generally continued to decline. In the last cycle, four or five L1s had market caps over $100 billion, but this cycle only ETH and Solana remain. The market seems to be leaning towards the application layer, and the buying heat for infrastructure projects has faded. I believe BTC and application dominance will strengthen, L1 premiums will decline, but value may not necessarily shift to applications; it may just flow out of the market.

Guy Young: I believe there will be a value transfer. The scale gap between L1 and applications is enormous; even if 1% of the funds flow from L1 to applications, it would be enough to drive significant growth in the latter. The market needs more self-sufficient projects like Hyperliquid to break free from dependence on L1 valuations.

Jose Madu: Athena's USDE has reached $6.8 billion. How large can the perpetual contract futures market support?

Guy Young: The current open interest (OI) is about $110 billion to $120 billion, with yields of 15-20%. The crypto market generates about $10 billion in cash flow annually, mainly from Binance, Tether, and basis trading. Athena only accounts for 6-7% of the market; if we can optimize to a 20-25% share, the scale could reach $20 billion to $30 billion. When financing rates peaked at 30% last December, I predicted that if we connected with traditional financial institutions, Athena could bring rates down to 10-15%, achieving a scale of $30 billion. We are building these channels to ensure we can capture high leverage demand. However, the risk is that the revenues of applications like Hyperliquid and Athena depend on high trading volumes from L1. If L1 valuations collapse, these protocols may be affected. However, the MEme coin platform profits from new coin issuance and is not impacted by L1 valuation fluctuations in the short term.

6. The Financing Controversy of MEW and the Future of the MeMe Coin Market

Jose Madu: Guy, besides Athena and Hyperliquid, which projects are performing well in niche markets?

Guy Young: The resilience and innovation of Sky and MakerDAO in the DeFi space are commendable. Maple Syrup and Oiler have rebounded from near-zero TVL, showcasing the execution capabilities of their teams. Fluid has made a comeback through innovative monetary market cycles embedded in DEX with stablecoins. These projects have become role models in the industry through persistence and breakthroughs.

Jose Madu: MEW's market cap has dropped to $2.8 billion, and the ICO sold out in just 15 seconds, which is shocking. What is its current status?

Setters: MEW has impressive revenues in Q4 2024 and Q1 2025, earning $700 million in six months, with a balance sheet still holding $630 million in cash. The original plan was to raise $200 million and publicly offer $800 million, later adjusted to raise $700 million and publicly offer $600 million, totaling $1.8 billion in financing, with the public offering selling out in 12 minutes. However, after the token was listed, it fell in price, and Bonk captured market share by attracting issuers. The MEW team has been low-key, and recent interviews with ThreadKeys lacked a clear vision, leading to sell-offs. The fully unlocked token supply is transparent, but on-chain sell-offs have intensified market panic. MEW holds $2 billion in cash, but the K-Scan acquisition has been criticized as overvalued, and rumors about the Axiom acquisition have sparked controversy due to high costs. The current $2.8 billion market cap provides a valuation buffer; the decline stems from narrative and confidence issues rather than fundamentals. MEW still has the opportunity to revitalize the market through strategic capital deployment.

Jose Madu: Is the decline due to profit-taking or other factors? Can enthusiasm be reignited?

Setters: The sell-off is driven by the opportunity cost of rising assets like Solana, and Bonk's marketing offensive has captured the narrative. The MeMe coin market has extremely high liquidity, with capital seeking profit; MEW's $2 billion cash and industry experience are advantages. The MeMe coin sector has not been the market focus recently, but through incentive mechanisms and project catalysts, MEW can regain market share. The key lies in having a clear vision for capital utilization rather than cautious official responses.

Guy Young: I hold MEW coins and have a good personal relationship with the founder. The circulation of MEW is completely transparent, unlike projects controlled by individuals; price fluctuations are the result of real market supply and demand. The market is harsh, and the moat is weak, but the MEW team has the capability to turn things around. They are not just driven by money; they want to prove themselves. The $2 billion can be used to create a social speculation platform, similar to TikTok's viral spread. MEW has the most valuable retail user base in the crypto market, guiding them from MeMe coin trading to high-profit products like perpetual contracts is a natural direction for expansion. This requires the team to push beyond their current skill boundaries, but the potential is enormous.

Jose Madu: I'm concerned about the incentive mechanisms of equity and tokens. What motivates the founders?

Guy Young: This is a reasonable concern, but the MEW founders are already financially free. Their motivation lies in industry influence and innovative achievements. If the $2 billion is used for social finance products or cross-domain expansion, it could reshape the landscape of the MeMe coin market.

Jose Madu: Thank you, Guy, for the wonderful insights! Thank you all for listening, and see you in two weeks!

All: Goodbye!

Article link: https://www.hellobtc.com/kp/du/07/5987.html

Source: https://www.youtube.com/watch?v=Lnm50xNskKY

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