Why Expand Beyond Uranium

SPEAKER_01 0:13

Ben, thanks for joining us. Last time we spoke, the focus was on uranium I.O. That conversation was about taking a difficult physical commodity and making access work through modern financial rails. Metals I.O. takes that model into a wider group of materials. Uranium, gold, and the strategic metals basket and then upcoming metals like cobalt, silver, palladium, and nickel. When you look beyond uranium, what made metals feel like the right category to build around?

SPEAKER_00 0:51

That's a great question. And firstly, thank you for having me on another conversation. I always appreciate these. I think as we looked at it, we kind of maybe were gluttons for punishment, right? We looked at it and we thought, well, we've done it for one of the hardest commodities to do it for, which was uranium, in terms of the regulatory dynamics and the custody chain. So everything else from there is easier in our view. And so that's played out. And so kind of the way we look at the metals piece was we've got a very solid blueprint from uranium. And actually, there are other metals, particularly around the base industrial metals, where similar characteristics of the uranium market that made it so attractive to bring on chain and to use tokenization for apply as well. And so, you know, we did we've done two things with metals, but I own we've set the relevant kind of train in motion to be able to bring things like cobalt, nickel, and palladium, which are coming up very soon, within the next month, I hope, um, to kind of use exactly the same blueprint as the uranium piece. Um, but also being able to sort of say, well, other people are doing this tokenization thing as well in the metal space, and it's not a zero-sum game. So actually, can we fulfill another another problem which is creating a central location for anybody to buy these strategic metals? You know, you you can go to the CME and you can get derivative contracts, and you can do that across all different assets. You can go to, you know, copious amounts of stock exchanges around the world and and investment platforms to access those, but there's no real single place to access physical metals. And given the increased volatility in the world and the sort of also increased move towards heavy industrialization, you know, industrial processes and modern tech, metals become critical as an investment asset class, we think. And so we wanted to create not just rails for the blueprint to be extended to other tokens and other assets on chain, but also to build be a central platform where people can come and if they've launched a liquidity pool with their token and they've done all the hard work around the asset and it follows meets those principles that we want to have in terms of physical redemption, in terms of proof of reserves, so on and so forth. We can also aggregate the kind of profile of those into one place alongside all the other metals that we're building from kind of first principles and all ground up. And so that's that's really the thinking behind metals.io. It was sort of too, you know, twofold in in being able to do more of the same of what we've done with uranium for other metals, but also enable wider participation from the ecosystem from people that are already building metals projects. The gold tokens are a great example of that. There's limited value we can bring to launching another gold token from start to finish. So we partnered with VNX for that. Um the strategic metals, that is a very particular use case and a harder use case, perhaps in terms of sourcing and storage and trading. Um, so again, great team in the in the in the rare tech team that have gone and built that. And so we wanted to just ensure that they could easily be found within within the Tesos ecosystem, and metals.io is the logical place for that.

Explaining Metals.Io Without Crypto

SPEAKER_01 4:16

If you had to explain uh metals.io to someone who understands gold and stocks but doesn't really necessarily care about crypto, how would you describe it?

SPEAKER_00 4:27

Yeah, I think I would describe it as very simply you are buying the physical metals. So the tokenization structure means that you are, you know, able to physically redeem these metals and the the the token price, every project that we have, we've got two other external projects, and ourselves spend a lot of time ensuring that what we're doing is tracking uh and reflecting the actual physical market price as closely as possible. Because, you know, to really deliver on the core basis of why metals and commodities should be interesting to anybody, it's really that diversification benefit, right? It's they're gonna move differently, and their demand profile and the supply and demand dynamics aren't going to track the wider economy necessarily, and they're not gonna move in the same way your stocks and crypto are going to move. And so as things happen, like you know, conflict in certain regions or energy crises, actually having a breadth of assets that you can hold in a single wallet on-chain is something that we think is beneficial to everybody. But what I would say is these are not sort of uh digital assets without anything behind them. These are these are structured in a way that you're buying and trading the physical asset itself. And so it really is just taking away all of the other operational costs that you would have from going and buying a gold bar from somewhere and giving you that same financial exposure without any of that operational burden. And that's true of all these other metals, which frankly, certainly with uranium, we talk about it a lot. But before we launched in December 2024 with uranium, minimum entry point for physical uranium is about eight million dollars. Current spot prices, there's no minimum now. You can have beneficial entry for physical uranium without needing more than a couple of dollars, and even that you you could you could do it with less than a dollar. But um, obviously then taking physical delivery, there are some minimums, and you need to have an account and things like that. But but it's absolutely possible. And and now we've had an 18-month track record. We are seeing people kind of from the supply chain themselves looking at how they could get better balance sheet efficiency through using the tokenization structure.

What Uranium Proved First

SPEAKER_01 6:48

Uranium was a difficult first case, regulated, physical, operationally complex, and hard for most people to access directly. What did uranium.io prove that made metals.io possible?

SPEAKER_00 7:03

I think it I think it I think it comes back to the earlier point, right? Which is if we can do it with uranium and we can we can make it transferable and we can make it something that can be collateralized and you can borrow USDC against, which you absolutely can do with XU308. It's a much easier path in many cases, if not all cases, certainly as we look at other metals, to be able to do that as well. And actually, you're not facing as many hurdles, I would argue, from an education perspective as you are from a uranium perspective. You know, the moment people hear uranium, generally their brain skews negatively towards weapons, etc., um, rather than their upside potential, which is where the real growth comes from, right? Which is it's the only base input into nuclear power and nuclear fuel, which is why we think, given the growth there, it's it's a super interesting acid class. Um and and I think you know what it's proven is that there is demand out there for these physical metals, you know. And I think you look at we've had some very good tailwinds recently in terms of not just the general trend from the TradFi and commodity investors overall and investors generally, in terms of, you know, the heavy or hard assets, low obsolescence trade, which is being talked about more and more. Um, but actually, how do you do that practically? Bar some sort of derivative products or ETFs, how do you get access to the physical? Well, in many cases, you can't unless you've got a lot of free capital and you're willing to take on the operational burdens to do that. Metals.io sits at the intersection of that trade thesis and providing easier access using modern infrastructure and rails. You know, I'm at consensus right now that the institutional kind of big financial institution dynamic is is very much here. It's not coming, it's here, right? You know, connections by JP Morgan, DTCC, all these guys have got a huge booth at the conference. They're having side events. So the on-chain accessibility is something that isn't a theoretical thing anymore. There are big institutions coming, and and we believe that we're playing a role in quite a niche area right now, but we feel that can grow massively.

Why Start With Gold And Baskets

SPEAKER_01 9:26

Metals.io starts with gold, uranium, and the strategic metals basket. Gold is familiar. Uranium tested the model with a difficult commodity. The basket brings in materials that most people depend on but rarely think about directly. How did you decide that was the right starting mix?

SPEAKER_00 9:49

Yeah, I think like anything, it's I think we decided it was the right starting mix because we were launching a platform called Metals. So inevitably, the first investment grade metal people will think of is gold. So we felt like we had to have a gold project to add credibility to this is something where it can be a single place for investing in metals. If you know a big chunk of your audience that comes to metals, the first thing they're looking for is gold. And you don't have that, you've kind of got a big credibility problem and trust problem that you you need to solve for in other ways that is quite frankly expensive. Um, so we felt like gold was almost table stakes. Uranium, we see this as a bigger distribution opportunity, having it on metals now as well as uranium.io. Um and the rare earth metals basket was that combination of very interesting, you know, it's a mix of materials that are critical in, you know, EV production, in nuclear reactor production in things like hafnium, in, you know, uh wind turbines. So any big heavy industry that's going to drive society forward, or technology that's driving society forward as we become more dependent on modern technology, generally we'll have one or a number of these uh rare earth metals, or these rare earth metals will feed into magnets that then are critical for these industries. And so actually that was very appealing to us because it plays into the similar narrative themes of as as uranium did, right? Which is modern society has gonna is gonna place a huge amount of demand on, you know, these industries and these technologies, but they're underpinned by a few critical, you know, there's a choke point of a few critical input materials. And so providing broader access to those input materials is beneficial for the producers of those materials because there's ideally more capital, we're growing the pie. But also, in theory, and please everyone do your own research, right? But in theory, it is as theoretically a very sensible trade in terms of the economic fundamentals of these materials and the supply and demand dynamics that are at play where demand is growing exponentially. Um, and that's borne out through a lot of the regulatory policy and and governmental stances around these materials as well.

Which Metals Come Next

SPEAKER_01 12:15

The next group includes cobalt, silver, palladium, and nickel. Those metals connect to different markets: batteries, industrial demand, and precious metals, supply chains, and manufacturing. What makes the metal fit for Io metal stuff?

SPEAKER_00 12:33

Yeah, I think I think we, you know, I think our focus, if I'm being honest, and I'll I'll probably get a slap on the wrist from my marketing and comms team, but I think the interest really is more in things that align more closely with the uranium thesis, right? So whether aren't any or very many alternatives for access, which generally skews towards these base industrial metals. So certainly cobalt, nickel, palladium fit that bill, albeit palladium is on the bound, you know, depending on how you look at it. Is it a precious, is it, is it an industrial thing with silver to a certain extent? Um but we want to kind of go after the periodic table. I think naturally that starts with with the industrial metals, because I think our case for utility there and using blockchain and the value add from blockchain is much greater than it is with a lot of the precious metals where there are existing investment vehicles that that can serve the needs from of most investors. And so there's also a saturation dynamic there in terms of do it, does one need another another precious metals product? I think what becomes really interesting is we're starting with the spot commodities, as we did with uranium. But the thing that I'm really excited about is being able to take the pressure off the thought and education dynamics for the individual investor. And what I mean by that is being able to put these together in more thematic baskets that people can connect to. And to your earlier point, right? People don't necessarily want to go and research Haftium or you know, any of these other rare earth metals, but they understand the EV or the battery dynamic. Once we have these fundamental spa assets, it becomes very easy to curate, you know, vaults and what I would have called in my old Tradfire days model portfolios of these assets that can be built thematically. And so actually what we're doing is creating one another opportunity for us in terms of an additional product that's of interest that makes our platform super sticky, but at the same time making it much easier for people to kind of comprehend how this fits into their investment portfolio and their wider thinking about where the market may go. Um, and so that that's super exciting. I also think, you know, we've got to start with the spot assets that are physically deliverable, building the right foundations of the market. I've talked a lot about we're skipping to the end point and the good stuff with tokenization, right? We don't need to go through traditional market developments to get there and wait decades for that. We can the fact that these markets are somewhat archaic and lagging behind the equity markets and the fixed income market to a certain extent is a is an opportunity to add a lot of value. But I do think if you think about principally how we build the right ecosystem around what we're doing on metals, we have to start with the spot that can be physically delivered. And then you layer onto that, you know, making it easier to invest in the spot through the vaults, thinking about collateralization and enabling not just recognizing that we're operating an ecosystem, it's not just about these medical assets, but them being able to be posted as collateral to borrow US dollars or whatever currency or whatever other asset and then reuse them. Um and then obviously logically perps as the sort of, you know, in my belief, the the next evolution of forwards and futures, perps are there, right? And but again, I think until you prove the liquidity in the market is there for the spot asset in its various forms, you can't really layer on the evolution of these other products that provide and meet different investor needs. But that's certainly our vision is to be the place to go for investing in metals. I talked about it at Tesdev, right? If you think about the core trading for a lot of metals driven by some somewhere like the LME, the actual trading of the physical between parties hasn't really changed for a hundred years. And so this for me makes it super exciting because it's a real opportunity to disrupt, modernize, and add value through blockchain technology.

SPEAKER_01 16:58

A lot of people who want exposure

Mining Stocks Versus Spot Metals

SPEAKER_01 17:00

to metals start with mining stocks because that's the access point they already understand. How do you explain the difference between owning the company story and owning the underlying material?

SPEAKER_00 17:13

Yeah, I think personally it's a it's a complementary offering, right? Um, and the reason it, you know, it it doesn't necessarily track exactly is you're picking up both equity beta risk in terms of the wider market view of what's the balance sheet look like for this mining company? You know, what's the quality of the assets they've got in terms of location, what's the regulatory risk of these companies with a changing administration? Um additionally, you you you you take in a bet when you invest in mining stocks on the quality of management in being able to execute on a plan and deliver those cash flows. And of course, that's linked to the underlying spot asset. But I I think there is a balance to be struck in terms of and if and actually if you're playing this this the commodity sector at different points in time, there'll be more value in in the mining stock, then there'll be more, and the producers and the and the uranium stocks, let's stick with uranium. Um and and that bore out last year, right? Uranium's mining and producer stocks were were well up because of the positive sentiment. So that's when the FOT beta worked in the in its favor, whereas the spot asset was up a little bit, but but by no means to the same extent as a lot of the North American mining and producing companies. But if you can hold both, that enables you to capture some of that sort of basis and the and the dynamic between the two and enables a more holistic play into the commodities market. So I don't I don't think it's an either-or, it's maybe, you know, scaling up or down depending on your market thesis and what's going on more broadly in equity markets. And and you know, mining's a great example of where things can change quite dramatically. You know, I'm talking to a lot of junior miners and explorers because they want to understand how we can help them sort of create capital and source capital through tokenization. Because historically, what would have happened before we had tech and you know, big tech and all that kind of stuff is people would have, you know, for a high risk, high reward trade, they would have invested in junior miners on the AIM exchange in London or on the TSX in Toronto. The market has, you know, the demand has completely fallen out of the market. And now, whether that comes back with the Halo trade and people looking at that is another question. But I think that that wider sentiment around market dynamics and what that means for liquidity, investability, all of that, all of that stuff, is something that you don't have a real concern about when you're investing in the spot asset directly. And so that's why we think this is something that is exciting, engaging, but also complimentary to those people that want to invest in commodities and hard assets more broadly.

What Ownership Means Legally

SPEAKER_01 20:13

I want to stay on the word ownership because the whole product depends on that word meaning something specific. When someone holds one of these assets through metals.io, what does ownership actually mean?

SPEAKER_00 20:29

Yeah, I think for, and it's, you know, we've brought external parties onto onto the onto onto metals.io as well, and it's been a big thing that we spent a lot of time diligenting. But for us and for metals.io project, ownership means that it isn't some a separate asset that is referencing some physical uranium somewhere. Actually, legally, what it should mean is that you you have beneficial ownership of that asset proportional to the amount of assets held by the total total tokens in circulation. And that means subject to whatever regulatory requirements and storage requirements exist in the physical market, you should be able to have that optionality to take physical delivery if you want. So it it's think of it more as like holding warehouse receipts than holding a separate digital asset that references a commodity. It very much is about, you know, we've worked hard to build a, and certainly with the other metals coming on board, you know, that means going out and finding other large bonded warehouse capabilities that exist in Rotterdam and Switzerland and elsewhere, right? Because uranium, we did it with because there's only three to choose from for uranium. We we we partner we worked with the Canadian firm, but you know, you do have to go through all that onboarding process, all of the commercial negotiation. Because For someone to really for an asset to track the price accurately, it needs to be that spot asset that can be delivered at some point for the value in the market. Now, you may never choose to do that, and that's totally fine. But you need to have that optionality, and that only works if legally you can trace the claim back to a token holder being a beneficial owner to a certain proportion in line with the amount they hold. So what we use is sort of trust frameworks, and and and they're existed for hundreds of years that enable this, but other assets including commodities, and there's no reason it couldn't work. It's just the transferability is much easier when the ledgers on the blockchain.

SPEAKER_01 22:46

The user-facing explanation is simple.

The Hard Parts Behind The Scenes

SPEAKER_01 22:49

Physical material, custody, digital ownership, and easier access. In practice, which part gets hardest? Custody, redemption, pricing, settlement, liquidity, regulation, or something else?

SPEAKER_00 23:04

Yeah, that's a bit of a it's a bit of a Sophie's choice. I think in terms of the the hardest bit, it it really is I think the operational dynamic as it occurs as it relates to settlement. So we spent a lot of time over the last six months as we've seen more interest and demand thinking about if this gets really big, how do how do we do this, right? How do we deliver something on T0 or T plus one that settles in the physical market on a T plus 15 basis? Um, and I would say to those in even in the transfire space that are looking at derivative products and other types of product, that that that's something that can't be underestimated. Um and so ensuring that you have a clear view on the operational requirements and the legal basis for those operational compon requirements is what has been the hardest part to square. But I think we've got there. I think we've got there, and there's a level of you know, certainly with uranium, we've got there because there's never been a failure to physically deliver. So we can take more of a risk-based approach around settlement. Um physical redemptions, not something we've faced into yet, but there's well-established processes for transfer of physical materials from one owner to another, it's very paper-based. Ideally, we'd love these big storage facilities in uranium and other markets to be used in the blockchain as well, so it can all be instantaneous. Eventually, I think we'll get there, but as it stands right now, that that gap and that timing between kind of settlement of the physical material if we go and procure more of the physical material and minting the tokens that people expect to be delivered near instantaneously is the thing that's been a big challenge to continue to work through. And then the separately, I think the other big challenge that hopefully is a problem for a short in the short term but goes away longer term is the pricing, of course, because you only encourage people to hold and trade the assets on metals.io if the price is reflective of the physical market, because the physical market right now is where all the liquidity is and all you know, the vast majority of the trading happens. Over time, I'm optimistic that's going to be less of a problem because we are going to become the venue and the mechanism for trading physical, physical metals. And as that volume, as the fulcrum moves on that volume, right, then we become the market, we become the pricing, and then creates another opportunity for us as people are like, well, how can we get your pricing from metals.io for these assets because you're doing more of the volume. That's ultimately the vision, you know. It requires patience and you know, resilience to get there. You know, we see lots of different announcements coming out as people recognize the opportunity in the physical commodity space. So we have to stick to our guns and believe that we've got a strong product, which we do. But you know, we've gotta we've got to just stick with it. And I I ultimately believe we'll win in the end.

Where To Follow The Project

SPEAKER_01 26:24

Where should people go if they want to learn more or follow what you're building?

SPEAKER_00 26:29

Yeah, so I think the two easiest places, metals.io, we we it's a super simple URL, um, and that's that's advantageous. Uh, uranium.io is still there if you're looking for more specific uranium details, um, but you can access that through metals.io as well. And if you are already uh do you already have your wallet connected to uranium.io or your holdings will automatically be connected when you connect your wallet to metals.io. So we've replicated a lot of that information. So metals.io would be, I say, the first place to go. If you're on X or or Twitter, as I still call it, maybe that shows my age. Um then Metals Official is the handle. Um, again, you you'll see all of our announcements and all the all the great work that the team's doing around driving adoption and traction for this. So they're the two places I would encourage everyone, anyone to go who's starting to look into what we've built here.

SPEAKER_01 27:23

Ben, I really appreciate you coming back on and walking through this. What I think is useful about metals.io is that it gives people a clearer way to think about material they usually only hear about through headlines, miners, or broad community talk. Like we said earlier, gold is familiar and uranium showed the model working with a really difficult physical asset. The strategic basket points to materials sitting underneath energy, manufacturing, defense, and modern technology. For anyone listening who wants to follow the project or learn more, check out metals.io and follow Ben and the metals.io team for updates. But for now, we'll just leave it at that. Ben, thanks again for joining us.

SPEAKER_00 28:11

Always a pleasure and thank you for hosting me. It's a great discussion, always. Thank you.