Franklin Templeton: Building a Mutual Fund on Solana (Breakpoint 2024)

0:00Hey, everyone. As you know, Solana is one of the ecosystems I'm the most interested in. I've been incredibly bullish. I love to see the vibrancy of what is happening in the space. Unfortunately, I couldn't make Breakpoint this year, but the stories have been amazing. I heard the talks are incredible. And we're really proud of Real Vision to give you talks from Solana Breakpoint 2024 in Singapore. I really hope you enjoy them.

0:38Hi, everyone. Thank you for having us here today. I'll say it's very bright up here, so the size of the crowd isn't quite as intimidating as it might be otherwise, but hello. I'm Mike Reed. I run partnership development at Franklin Templeton Investments, and I'm going to talk to you today about putting a money fund on chain, what that looks like, why we did it, and why we thought it would be a good idea. As I was preparing for this, I realized that I think I have nine slides and now four and a half minutes to go through them, so I'm not going to go through this slide by slide. I thought it would be better to tell you about our journey and where we started and where we are now and why we're excited for the future.

1:16Our idea... No one cares about that. Say hello to tokenization. Our idea was to try and find operational efficiencies in our overall business by using blockchain technology. And we thought that the idea of putting a money fund on chain, quite frankly, sounded kind of cool and sounded fun. So we began that process, you know, and we chose a money fund very specifically because money funds have long been in the transactional economy. There's money funds that have check writing and debit card capabilities built on top of them. And we thought if we wanted to try and use the blockchain efficiently, we would want to have as many ledger entries as we possibly could.

1:53So we amped up transaction volume even further, not just having a money fund, but a daily paying money fund. Rather than do this in kind of an inauthentic way by hiring an outside vendor to do the tokenization for us We decided to build our own development team So we hired a team of engineers who worked tirelessly to build a digital wallet infrastructure Build an on-chain transfer agent And then we did it We launched a money fund We put it on blockchain rails And we were super excited And it turned out no one else was Because our money fund at the time was yielding right around 0 % So no one cared.

2:29But we were high-fiving. We thought there was this great technological invention. You know, we were super excited about it. And then an interesting thing started to happen. Interest rates started creeping up slowly. And then people started to take note, and they were interested. And then all of a sudden, some of the small regional banks started experiencing some volatility. And then we got reverse inquiry, and people started calling us and asking us, Hey, can we put our treasury with you? Can I put my dry powder with you? And we started getting inflows from a variety of people who were in the ecosystems that we were working on.

2:59People like VC funds that invested in blockchain-native businesses, Web3 businesses that had treasuries. And they started parking assets with us. And then we started raising money in a product, quite frankly, we never really intended to raise money in. And we were really excited about that too. But what made us more excited was when we started thinking about this product less like a product and more like a financial services tool. So I'll give you an example of that. The VC client who I mentioned earlier, he called up and he said, hey, can I transfer this to other people? Can I use this and send it to my portfolio companies to fund them that way?

3:33Because usually what happens is I have my money in this money fund. I have to sell it, transfer it over, and then I hope that my portfolio company invests in something responsible, like a money fund. And that whole process is three-ish days of cash drag. And we said, yeah, we can code that up for you. So we started building that into the system, and all of a sudden we had transferability where users of our product could send it amongst themselves as a funding mechanism. Then we had another client come up and he said, you know, I really like this product. It's great. I would love to be able to onboard natively with a digital asset.

4:03I would love to use USDC to be able to make Benji purchases. And we said we can code that up too. And so we did. And we built a really exciting tool that could be moved around all of a sudden across all these different blockchain ecosystems. Now, the reason we're here today, this is kind of a timeline of everything I just talked about. I think the stories are better than this. If you like this, feel free to, I don't know, take a picture or whatever. But the reason I'm here today and the thing that we're really excited about talking about here at Breakpoint is the 13th step, which is where we filed to develop on Salon and natively.

4:37Now, again, we don't use third parties. We mint authentically on chain. We do not have an off-chain book of records that we maintain. The record of ownership is the token itself. You own that token in your wallet and that's your authentic record of ownership. Why do we like Solana? Why do we choose Solana? You know, we have a tech suitability framework that we use when we're evaluating all of the different blockchains that we develop on. We also, quite frankly, have a business development one where we look at the community and see how excited the community is about using the chain. So many of the reasons that you all are passionate about Solana are the reasons that we're passionate about Solana as well.

5:11I'd encourage you, by the way, this isn't in any of the content, but I'd encourage you to look at our Twitter account. It's FTI underscore DA. Authentically, that is written by our team, our digital asset team, our research analysts develop content. There's actually an interesting piece on Solana on that. But in my last 10 seconds, I'll point out the things that we like about Solana. Speed, we want to be able to move money around very, very quickly. Cost, the cost efficiencies of running this system on chain are a benefit to both us as a firm and to you as an end user. modern architecture. The standards used on Solana are extremely important to us, and we're working on developing standards that we believe should be used across the industry.

5:48And lastly, the Solana team has been absolutely fantastic to work with, and their development tools are second to none. So I'd like to thank you all for having me here today for my five-minute pitch. Enjoy the rest of Breakpoint, and I'll see you all around.

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