Onchain Treasury Allocation with Mathieu Baril from Octav

[00:00:00] Mathieu: Being a Treasury Manager is like a new, a new skill that they, they have to start to learn. 

[00:00:05] Mathieu: Where onchain you have access to everything. If you, even if you only have 2, 3 million, you can actually deposit wherever you want. 

[00:00:11] Mathieu: Now there's also like a bit of risk, a risk level. Lending market, Aave, Compound, Spark. 

[00:00:17] Mathieu: These are kind of the traditional one that you can use. You're gonna generate between 3, 5, 6, up to 8. We've seen 12% on this. 

[00:00:24] Mathieu: So these are kind of a good too because you can also deposit at any point in time and withdraw any time you want. So it's way easier to kind of move the asset.

[00:00:32] Mathieu: And then you can go a bit more risky if you believe long term in your token. You can provide liquidity to Uniswap for example, and stuff like that. 

[00:00:39] Mathieu: But there's a lot more risk, a lot more control, and a lot more understanding that need to be done. If you want to go more deep into this stuff. 

[00:00:46] Umar: Welcome to The Accountant Quits Podcast, where we help accounting and finance professionals learn how to manage a business using crypto. 

[00:00:55] Umar: Today's topic is on onchain treasury reallocation. In traditional finance, treasury management is a well-documented practice with plenty of guidance and literature, but in web3, many of those concepts don't quite apply. 

[00:01:10] Umar: Foundations, DAOs and other web3 startups often hold their treasuries in wallets with those assets remaining idle.

[00:01:19] Umar: But by strategically allocating part of their treasury to generate yield, these organizations can create an additional revenue stream to help finance daily operations. The companies that understand DeFi tend to have a longer runway. They burn less of their initial funding because Defi yield covers some of their working capital needs.

[00:01:41] Umar: But how do you identify the right protocols? How do you invest according to your risk profile and revenue goals? 

[00:01:48] Umar: In today's episode, I'm excited to welcome Mathieu Baril, the CEO and Founder of Octav, to provide us with the tips and tricks on managing a treasury in crypto and how to leverage DeFi yield.

[00:02:01] Umar: Octav is a web3 financial data and treasury management platform with some of their clients, including Gelato, Beefy Finance, Across, Morpho, and Nascent. 

[00:02:14] Umar: In this episode today with Mathieu, we'll go through the framework for deploying excess capital into DeFi, how should web3 companies forecast their budget and extend their runway?

[00:02:25] Umar: Lastly, if you're new to this channel, I'd really appreciate your support to help us grow by liking this video and subscribing. Now enjoy my conversation with Mathieu. 

[00:02:34] Umar: Mathieu, welcome and thanks for taking the time to be here. 

[00:02:39] Mathieu: Thanks for having me. 

[00:02:41] Umar: I'm really happy to finally have you on the pod Mathieu. 

[00:02:44] Umar: I want to start the episode with, asking you can you share a little bit about your background, how you became interested in blockchains, and maybe share the origin story of founding Octav.

[00:02:56] Mathieu: Yep. Started crypto pretty early 2012, 13. I was a Bitcoin miner, in university. A lot of free time. Decided to just mine Bitcoin with the, the free electricity of the, of the university. It was awesome. 

[00:03:08] Mathieu: And then I just did that for a long time. Kind of went on Bitcoin talk forum. Met my Co-founder there also, kind of grow a little bit of the infrastructure of mining. I'm a robotic engineer in Biotech, so when I finished my master, I went to California, worked there in biotech, was part of two exits, so was kind of like my medcare education career. 

[00:03:29] Mathieu: And then after that, I came back in Canada when Covid hit, and decided to just like deep dive, jump into DeFi, was the 2019, the, the, the golden age of DeFi.

[00:03:39] Mathieu: And then realized at one point that it was really hard to track everything. It was pretty new, pretty nascent. So, a group of people that I've kind of met over time in, in online, I started to invest with them. 

[00:03:51] Mathieu: And we, we created a group called DCV Capital, some name that people know, probably DCFGod and 0xMackay.

[00:03:57] Mathieu: We work kind of all part of these group. And then tracking our asset, our investment was really complex, so that's why we decided to say, hey, we need to build something. So they invested in Octav and this is how Octav was born.

[00:04:09] Umar: And sometimes I wonder, when I hear, project names, where did the name Octav come from? Or what does Octav mean, or how did you come up with the name? 

[00:04:18] Mathieu: Yeah, so, so tracking everything was the first challenge. Second challenge was declaring my taxes, doing all my reconciling reporting. And so when we started Octav, the, the first goal was kind of like, can I help?

[00:04:29] Mathieu: Can I have a platform to help me do my taxes? And so I went online and look who invented taxes. Octavian from back in the time was the first emperor that kind of created the taxes and systems. So our first name was Octavian, actually. And we just make a make it a bit more short and it became Octav so.

[00:04:47] Umar: Well, I actually didn't know that. So that's the fun fact for the day for the listeners. Now I want to start the episode with, how companies should actually prepare a budget forecast. So there are many web3 companies innovating using blockchain to serve enterprises, and they've gone through fundraising rounds.

[00:05:07] Umar: But many are not generating enough revenue as the the total addressable market in crypto is still very small and some of them are still iterating to find their product market fit, and therefore that means that the budget and cashflow forecast exercise, it should not be taken for granted for these startups.

[00:05:26] Umar: I wanna ask you if you can share maybe some of the important questions that web3 teams, they should ask themselves whenever they devise like a cashflow forecast. 

[00:05:36] Mathieu: Yeah, well, super important to understand your cash flow forecast. Make a budget, make sure everything makes sense in the long term. What I love to say we did, we did a class on this, but what I love to say is make sure you have like a catastrophic scenario and normal scenario and an awesome scenario where, where you raise all the money.

[00:05:54] Mathieu: But I think it's important, like we've had a lot of really high, raise in 2021, so a lot of, of young entrepreneur got a lot of money, but now since the, the market is maybe in the bear market, hopefully not for a long time, but a lot of people that they, they don't control their runway, don't control their cash flow.

[00:06:09] Mathieu: So super important to understand that and make sure, when is your next raise? Are you gonna raise something? Are you, are you gonna start generating revenue? Like you said, not a lot of of people in crypto generate revenue. So really focus on this understanding what's your cash flow, your budget, and making sure you understand, are you gonna need to raise later on or you're still good for, for quite some time?

[00:06:29] Mathieu: That's the idea. 

[00:06:31] Umar: I know that you are an angel investor in a lot of web3 projects, so you've probably seen a lot of investor updates that you receive from these projects. I wanna ask you, have any of them like really stood out with their communication and if so, what are some of the elements they're doing right?

[00:06:49] Umar: And basically what other web3 startups could learn from? 

[00:06:54] Mathieu: I'll be honest, I think I didn't saw enough report, monthly report. I would love to get more monthly report. It's often like overwhelming to say, oh, I don't have the time to build that monthly report for my investor. 

[00:07:05] Mathieu: When we started Octav I told my, my, Director of Ops and my Co-Founder, like hey, let's do monthly reports.

[00:07:11] Mathieu: It's gonna show where we are and that we control our finance. And at the end of the day we realize that the monthly report that the team due is not for the investor, it's for the team. Because to be able to provide these data to your investor, you need to be in control of your finance, your team, your runway, your budget, everything.

[00:07:26] Mathieu: And therefore, it's important for the team to build that. If you have decentralized finance like on any chain that you that you deployed, you need a way to track this. And that's why, like for us, it was also a good way to show the power of Octav through our monthly report.

[00:07:40] Mathieu: So I think it's super important for the team more than an investor to do the monthly report to understand where you're going. Should you address hiring more people or firing people? Should you reduce your cost of AWS or can you spend more in marketing? That's where I think the monthly is super important.

[00:07:56] Umar: And if some of these projects are not generating monthly revenue, what would be then some metrics that would be important in your experience to share these investor updates? 

[00:08:07] Mathieu: Yeah, early time, like 2021 when, when everything was beautiful like, investor were looking often at like the traction.

[00:08:14] Mathieu: So how many user you have on the platform, like, are you growing more user over time or the TVL. So a lot of protocol, they're gonna have TVL or, or, or asset under management in traditional market but the TVL.

[00:08:25] Mathieu: It worked and it was good, but recently we've, we've seen a lot of fundraise fail because, founder was wanted to show traction in the number of user in TVL, but investor now start are looking to get some revenue. They want to see some revenue, some traction for real. So the time of of user base, raise or TVL base raise doesn't work anymore. So I think that that's important to focus on the revenue side at, at that, at that point.

[00:08:50] Umar: Now, moving on to like risk management for crypto. So if a company decides to adopt crypto, their risk management framework around custody risk, banking counterparty risk will be very different, right from a traditional web2 company. And of course I'm excluding like obvious volatility risk from holding volatile tokens like, BTC, ETH.

[00:09:12] Umar: Now, a lot of our listeners already using crypto and I'd like to assume that not everyone has fleshed out an elaborate risk management framework with internal controls to mitigate some identified risk. So let's take those risks that don't depend on market forces. What would be some of the practical steps that the listeners they could take and to start developing, let's say a risk management framework?

[00:09:38] Mathieu: Yeah, well there's, there's two different things that's super important is what you're gonna have onchain, what you're gonna have offchain. So if you're paying some, some of your employee, with fiat, then you need to, to plan for this. And then if you're paying all your employee, with crypto, you also need to plan for this.

[00:09:53] Mathieu: So you need to understand what can be onchain, what cannot be onchain. After that you have to, to determine your risk level. Are you willing to risk some of your runway to generate yield? Some people are not. You were asking, you were saying like some people are not used to that treasury. We're working right now with Safe and we, we, we evaluate 55,000 wallet of Safe, and we realized that 80% of the token are in the wallet. They're not in protocol. 

[00:10:18] Mathieu: So a lot of people just hold their token in their wallet. Which is, which is okay. But if you know a bit how DeFi work, you could deploy these USDC or any like, stablecoin into protocol like Aave that the risk is lower. Not saying there's no risk, by the way, no financial advice.

[00:10:34] Mathieu: But there's like way to deploy some capital a little bit like you can do also, in traditional market. You can have some vehicle of investment in the traditional market that can generate a bit of yield that just help you kind of like update, push a bit your runway because you can generate a bit of yield there.

[00:10:50] Mathieu: So I think that's really important to understand what's your risk level that you can do and then de deploy onchain and offchain to make sure you, you kind of manage the risk there. 

[00:10:58] Umar: I remember when you, so for the listeners Mathieu is also an instructor in the Crypto Accounting Academy and in Cohort 5, you, you shared an anecdote with one of your investors Sequoia?

[00:11:11] Mathieu: So, so it's not one our investor, but yeah, I remember said this idea. So, when we raise the first round, we raise 1.8 million, from different investor. A lot of our angel from like Founder from other protocol and, and SpeedInvest, Polymorphic Capital, Nascent and stuff like that. And then when we raise the 1.8 VC they want to see you move fast and they wanna see the company grow.

[00:11:32] Mathieu: So they, they came to us and say. You have to deploy this capital. You have like one year to deploy this capital. 

[00:11:37] Mathieu: And then we sit down with my Co-founder, we look at like, okay, what should be the roadmap when we think we're gonna raise the next round, how much revenue we can generate? And then we took a, probably a bit more, conservator way than what our investor wanted us to do.

[00:11:51] Mathieu: But for the good thing, because after about six months, Sequoia released a letter to all his portfolio and saying, you need to survive until 2025. And so, if I was to listen my VC and just spend the money in the next six months to raise, after that, I would've been, out of business. And so I think it's important to also like, take the VC 

[00:12:09] Mathieu: input to like understand your risk, but also like as a Founder you have your own risk. 

[00:12:13] Mathieu: So I went back to all my investor, and I told them, look, we didn't spend the 1.8 million in six months like you wanted us to do, but I'm probably not that wrong because now Sequoia say, we need to survive until 2025 and we're still in business.

[00:12:26] Mathieu: So I think it was probably the, the right move to do. 

[00:12:28] Umar: Yeah, that's a cool story. Now moving on to, so some of the investment strategies for web3 startups. So a lot of startups, they have like a one person finance team. That person oftentimes has to manage everything around operations, payroll, AR/AP, expense, monthly management reporting, plus native token management if they have one.

[00:12:50] Umar: Now, if they hold the treasury in both fiat and crypto, they also sometimes expected to generate, yield from let's say defi protocols. So not all Web3 finance professionals are optimizing their treasury and leveraging DeFi yield. I mean, the topic of the podcast today is on, onchain allocation.

[00:13:09] Umar: So, I wanna ask you if you could compare and contrast investment strategies for DeFi versus TradFi, and generally speaking, what kind of products would you deploy funds in, onchain products versus offchain? 

[00:13:22] Mathieu: Yeah. You're a hundred percent right. CFOs normally, like their job is just to reconcile, report, understand where the cash, the, the cash is going in and out.

[00:13:30] Mathieu: So kind of being a treasury manager is like a new, a new, skill that they they have to start to learn. In the offchain, like traditional market, you can have some loan that you can play with it. You, you have some, deposit guarantee, CD that you can get some yield out of this 2, 3%.

[00:13:46] Mathieu: You can lock them sometime to have better yield. So these are stuff that you can do. There's not many, many, like investment vehicle that you can use in traditional finance unless you're really bigger, when your startup is really hard. 

[00:13:57] Mathieu: Where onchain you have access to everything. If you, even if you only have 2, 3 million, you can actually deposit wherever you want.

[00:14:03] Mathieu: Now there's also like a bit of risk, a risk level, but, lending market Aave, Compound, Spark. These are kind of the traditional one that you can use. You're gonna generate between 3, 5, 6, up to 8. We've seen 12% on this. So these are, are kind of a, a good too because you can also deposit at any point in time and withdraw any time you want.

[00:14:23] Mathieu: It's way easier to kind of move the asset. And then you can go a bit more risky if you believe long term in your token. You can provide liquidity to Uniswap for example, and stuff like that. But there's a lot more risk, a lot more control and a lot more understanding that need to be done if you want, go more deep into this stuff.

[00:14:39] Mathieu: But the number of, of option is, is pretty, impressive. Like at Octav, we support 9,000 protocols, so that give you 9,000 place where you can deploy capital onchain if you want to.

[00:14:49] Umar: Now I know that Mathieu you are ranked in the top 5 on degen score. Just out of curiosity, I wanted to know what kind of DeFi activities one has to do to get so high in this ranking? 

[00:15:01] Mathieu: Yeah good old time. Degen score is kind of like. I don't think it's moving forward anymore.

[00:15:07] Mathieu: I think the, the team, left and, and Jello is, is building his own stuff and Adam also left. But back in the time, 2019, 2020, there was kind of like a, a fun committee where we could explore a protocol and kind of learn new chain and where to go. We've done a lot of stuff where it was minting an NFT or, or depositing in a contract before anything existed. 

[00:15:27] Mathieu: To be high in degen score, the fun fact is you cannot now be high because you had to get rugged sometimes, so I lost money trying some protocol and because you got lost money, you get a lot of point because you were early. So there's a lot of stuff there. We've seen degen score as being kind of the, the top one in 2021, 2022.

[00:15:43] Mathieu: There's new one Legend just launched recently, so they also have a score. So there's a lot of people that trying to do score. I think it's really related to like reputation or like credit. So it kind of fit into this idea of, of having a credit on chain. So yeah, to be top degen score right now, I think it's gonna be really hard because I think they kind of lock that.

[00:16:00] Mathieu: So I, that's a good thing for me. I can stay in the top 5 for, for a long time, probably. 

[00:16:05] Umar: I think you also ranked like very high in Legend. I I think I saw your Twitter post, uh, some few weeks ago. Yeah, 

[00:16:12] Mathieu: Yeah. I'm not I'm not too bad also on Legend. Yes. 

[00:16:16] Umar: Now, something I forgot to mention, earlier in this, episode today.

[00:16:19] Umar: So nothing should be construed as investment advice, for the listeners. So a lot of our listeners, they hold large amounts of stable coins and native tokens like BTC, ETH, SOL. Since we are lucky to have you today, Mathieu I want to ask you whether like you could provide two very practical scenarios of how web3 teams can put these assets to work and generate yield in DeFi and what sort of risk they should be aware of.

[00:16:45] Umar: And maybe just one more token I'll add there is let's say, a stable coin. 

[00:16:50] Mathieu: Yeah. Like I said, Aave, Compound Spark are really easy to do. There's more stuff also you can start looking at like Pendle or Spectra. These are all fixed yield system. So if you wanna have a fixed yield and other people will speculate on the, the, the future yield, you can use these platform.

[00:17:08] Mathieu: Most of the team also, they, they probably have some native token, or they have ETH like you said, BTC in their wallet. They could also use that to borrow against them. So a lot of people will prefer to sell their ETH or Bitcoin to pay, payroll and stuff like that. 

[00:17:21] Mathieu: But if you believe that Ethereum and right now we're pretty low, so not financial advice, but maybe it's gonna go up later on. If you don't wanna sell your asset right now, you can deposit in collateral, into a lending market so you can deposit, ETH or Bitcoin into Aave, for example, and you can borrow USDC. That you can use to pay your employee. 

[00:17:40] Mathieu: When ETH go back up, you could pay back your loan and therefore you didn't have to sell your ETH at the lowest price.

[00:17:46] Mathieu: So there's a lot of strategy that can be done like that, to make sure you don't sell at the right, at the wrong time. So if ETH is really low right now, you may not want to sell it right now. You wanna sell it later on, take a loan against it, and you can all do that on chain. 

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[00:19:37] Umar: Now on Episode 73, we had Jeremiah Smith from OpenCover to speak about DeFi insurance. And something that's important to reiterate for the listeners is that, DeFi cover is protocol, token and custodian specific. 

[00:19:52] Umar: So, for example a protocol cover, it could protect you against financial losses, resulting from a failure or attack, let's say, within a specific protocol, let's say like Aave but it would not protect you from maybe a similar event within Compound.

[00:20:06] Umar: Now, Mathieu I want to ask you, in your experience speaking with web3 projects, do projects in general, have they sought insurance cover for on chain transaction and protocol risk? Is this like a thing? 

[00:20:18] Mathieu: It's not really, it's funny that, it's funny that you asked me this question. I think, yesterday, Haseeb from Dragonfly was actually posting on this.

[00:20:25] Mathieu: You can go see his Twitter, but he was saying like that, insurance was something that he was really bullish on back in the time, but realized that there was not really a lot of, uh, traction on this. I think the biggest one right now is Nexus Mutual. 

[00:20:38] Mathieu: Insurance coverage is, is like super huge in traditional finance because, investor and asset manager will use that as a cover, as a hedge for the position that they take risk. The market of crypto is so small still. It's so limited that insurance coverage is really complex. It's also really new in how we cover this. Do you cover a smart contract risk or do you cover a hack?

[00:20:58] Mathieu: What, what do you cover? So it's really complex. So I think that because of that, not a lot of people will use, insurance to cover their, their risk on, on, on any protocol. 

[00:21:07] Mathieu: You could do it. Is the cost versus the reward worth it? I'm not sure. From what I've seen in the market, not a lot of people use insurance right now in DeFi.

[00:21:16] Umar: Okay interesting. Now because we are speaking of investment strategies, I also wanted to speak about tokenization of real world assets. I've not really covered this, so much on the podcast. So for the listeners, real world tokenization, it's one of the largest market opportunities in the blockchain industry.

[00:21:35] Umar: It has a potential market size in the hundreds of trillions of dollars. So basically, in theory, anything of value can be tokenized and brought onchain. And, uh, today at least, like we are at the first stage, and a lot of these, real world assets will include like US treasury bills, short-term US treasuries.

[00:21:54] Umar: I was having a look on DeFi Llama. There are, there's currently 9 billion locked into real world assets. And notable projects include, like Ondo Finance, Open Eden, even BlackRock, Franklin Templeton. So I wanna ask you, in terms of investment strategies, where do these tokenize t-bills fit in terms of risk?

[00:22:15] Umar: And when would you actually choose to deploy in the DeFi protocol like Aave versus like, you know, tokenized T-Bill? 

[00:22:22] Mathieu: Yeah, I think it's, like I said earlier, if you know how many fiat you need versus crypto, then you can deploy in, in the right platform. But maybe you have a little bit of, of crypto, but you don't wanna take too much risk.

[00:22:34] Mathieu: So you wanna have the same reward as a T-Bill that is traditional. Well now you can actually take T-bills yield, but onchain. 

[00:22:42] Mathieu: Personally at Octav, we, we almost have nothing in, in fiat. We are almost a hundred percent into crypto, but we do deposit in Aave and, and T-Bills and stuff like that because the risk is a bit like in, it's a middle ground between onchain risk and off chain risk because you're using the TBill.

[00:22:58] Mathieu: So the yield is coming from the traditional T-Bill system, but you're using a smart contract to do so. So it's a bit of an hybrid risk system. So I think it's, it's really depend of your risk profile. I'm a big fan of Aave because I believe that the yield is worth the risk. But if you wanna take a bit more risk, a bit less risk, sorry T-Bills could be like just fixed fee, and could fit into your risk parameter. 

[00:23:18] Umar: Cool. I think it's time to speak, more about Octa and the work you're doing around treasury management. So in light of what we've discussed around onchain treasury allocation, could you provide the listeners with an overview of Octav and maybe the analytics you provide for onchain treasury management?

[00:23:37] Mathieu: So Octav, like we, we spoke a little bit earlier, we are onchain data provider, so we provide data for anything about DeFi, so decentralized finance. 

[00:23:46] Mathieu: The idea for us is to provide you the data, but not like a subledger will do. We really wanna focus on the data part of this. We spoke a bit, a bit earlier about that, me and you, Umar, but like subledger will focus on more the tax part of this. 

[00:24:00] Mathieu: They will, they will try to connect with Xero and connect with, centralized exchange and stuff like that. Where at Octav , we really wanna focus on, on the, onchain data. So it's, it's more like if you wanna see us as more as a Bloomberg of the onchain data. 

[00:24:14] Mathieu: So we provide you with LP position in a protocol, we provide you with a position in Aave or anything like that. And then we're able to provide you with some analytics, so the evolution of your wallet over time. We can also provide you the data about a snapshot every day so you can have an evolution of your, of your reward or your gain that you've done.

[00:24:31] Mathieu: And then we also provide a lot of transaction historical data. So with this information, you can do your taxes, but we don't go in the tax or sub-ledger category. We really just stay in the historical data side. 

[00:24:42] Umar: Now, I will admit that in the beginning I was a bit confused whether Octav is a sub-ledger, mainly because it overlaps on the features of labeling onchain transactions.

[00:24:52] Umar: I wanna ask you for, I mean for the listeners, a lot of them are using a subledger. So would they then have to use both Octav and a sub-ledger for the crypto bookkeeping and maybehave the transactions like from Octav labeled and then, import them like into a subledger? 

[00:25:11] Mathieu: Super good question. Even us at the beginning, we're like, are we a subledger or data provider?

[00:25:15] Mathieu: We kind, we kind of like, kind of play a lot with this. At the end of the day, what we've realized over time is that some of the clients of subledger realize that they don't need a sub-ledger. A sub-ledger is probably like really useful for the CFO that want to like push stuff into Xero and all this, but there's a lot of Treasury Manager that didn't need that kind of sub-ledger level and they wanted to just have like a portfolio view.

[00:25:37] Mathieu: They wanted to have the transaction to understand what they've done over time. So we really wanna work more in the data side, more in a treasury management side. On the other end, we work with, I, I, I won't name any subledger, but a lot of sub-ledger contacted us to say, hey, can we get your DeFi data?

[00:25:53] Mathieu: So we have an API at Octav. And then a lot of them are like, hey, your data is really accurate for DeFi. Can we work with you? 

[00:25:59] Mathieu: Why will I work with a subledger? Because I will not do centralized exchange. At least we don't support it right now, probably in the future. But right now we don't support centralized exchange.

[00:26:09] Mathieu: We also do not really like push you for the tax stuff. So if you're an American and you wanna have your 1099, Octav will not provide you with a 1099. We will provide you with a CSV that an accountant can use and the accountant can use any platform. They can use a QuickBooks, Xero or TurboTax or name it.

[00:26:26] Mathieu: But we really like wanna stay more in the data side, so that's why we often are being seen as a sub-ledger because some of our client used to use a sub-ledger and came to us. And then some of our client, like you said, use both. They can have one sub-ledger and Octav just to help them understand really the onchain treasury management part and the subledger part.

[00:26:44] Umar: Yeah, I understand because I mean, those CFOs or, Controllers, they still want to, want to have the data in like, a Xero or QuickBooks. 

[00:26:53] Umar: So maybe it's best to, I mentioned some of your clients, at the beginning, of the episode, like Gelato, Beefy, could you provide maybe some of the client use cases on how maybe they use, 

[00:27:04] Umar: Octav and how then it differentiates between the sub-ledger use case, and maybe also share what were some of the clients struggling with, at the beginning, before they came to use Octav? 

[00:27:15] Mathieu: Yeah, the best example is Beefy. Jack is one of our ambassador now. He, he loves Octav and, and then when he was working with the subledger before, he had problem to have the accurate data of everything he had on DeFi.

[00:27:27] Mathieu: So he was not able to have all his position. And then when he came to Octav, he was able to create some rule that was really easy for him to understand everything, all the transaction, putting some like note in category for his transaction, which was similar to the subledger. 

[00:27:41] Mathieu: But with Octav, he was also able to provide a view to his community about the treasury.

[00:27:46] Mathieu: So at Octav we can have like a, a custom URL. So if you go like pro.octav.fi/beefy/treasury, anyone can go see that and see the treasury. And I think that's something that's important because if you work with some protocol or DAO, they want to show some transparency to their community. They wanna show transparency to like their investor and people that use the platform.

[00:28:06] Mathieu: And in, in a sub-ledger, you cannot really share your sub-ledger information with the community. But you can share your Octav dashboard with the community. 

[00:28:14] Mathieu: So I think it's like if you are, a treasury manager that do reconciling that use Excel or whatever, then you can use Octav because you can have more transparency for your community.

[00:28:24] Umar: Now in terms of like, data accuracy, when we spoke earlier, you mentioned that Octav has this, machine learning engine and users actually have to continuously provide feedback to improve like the machine learning engine. Could you walk us through how that actually works? 

[00:28:43] Mathieu: So back in the time, used to work at another auto dashboard, kind of integrating everything manually was a, was a pain.

[00:28:49] Mathieu: We, we could not see how we can scale. And we've seen it right now because, scaling with different chain and and different protocol is really, really hard. And so when I started Octav, I told my Co-founder, we need to find a way that we won't have to integrate everything. We can just let the system kind of learn over time.

[00:29:04] Mathieu: And so that's why we started the Octav as a machine learning and we use RLHF. It means reinforcement learning with human feedback. What it mean is that we have a machine learning with an algorithm, and then over time when people interact with Octav, we learn from these interaction. So let me give you an example.

[00:29:21] Mathieu: If you go and you deposit USDC into Aave, in Octav, we will show you that you've deposited USDC into a protocol. You can then come to us and say, Hey matt, this protocol, I know it's Aave because I just did the deposit in it. And in the next, the next hour or two, our brain will learn and say, okay, this user, Matthew told me that this protocol, therefore the, the smart contract belong to Aave and therefore the next time, let's say you Umar interact with this smart contract, we will know it's Aave because Matthew told me it was Aave.

[00:29:53] Mathieu: We have some reputation system, we have some anti-sybill system also to protect against people wanting to just give us wrong information. That's kind of the idea where we don't need to integrate every protocol. We let the machine learning learn how to integrate this stuff. A lot of my engineer at Octav are actually machine learning or data engineer, they're not necessarily like DeFi degen or people that really like know the DeFi stuff.

[00:30:16] Mathieu: They're mostly like learning with the machine, learning how DeFi work. 

[00:30:20] Umar: Very cool. And in terms of your pricing, could you walk the listeners, basically on how your pricing model works today? Yeah. Because I know it's, it works a bit differently to subledgers. 

[00:30:32] Mathieu: Yeah. So we're SaaS model, a lot of sub-ledger work per transaction. So they will take your wallet, put that there, say which chain you want, and then they will, they will charge you per transaction. When we started Octav, again, it's machine learning. Keep in mind this, so like we need transaction, we need data to learn. And so we said we cannot charge per transaction because we need more transaction.

[00:30:53] Mathieu: So when we started that, we decided to say we're gonna charge per addresses. And so we have a SaaS model. Depending on how many transaction you have. We have client that will come to us with 2, 3 addresses, no problem. But we also have some client that will arrive with a thousand addresses and we don't care if you have a 100 transaction or 5 million, because if you have 5 million and you interact with the 5 million, the algo will learn over time.

[00:31:14] Mathieu: So that's the SaaS model for the front end part. And the API system is really just a basic per call system. So pretty basic on this, on the API side. 

[00:31:23] Umar: Okay so very different to the other sub-ledger products. Yeah. Now on your website, I mean that's a different topic now, on your website, you mentioned that you also work with family offices.

[00:31:35] Umar: For the listeners, a family office is like a wealth management firm. They serve high net worth individuals and families. They provide like financial service, investment management service, tax strategy, and a bunch of others. Now, I wanna ask you, out of curiosity, how sophisticated are these family offices with respect to crypto, to crypto, and would they be using Octav in the same way as a native web3 project would?

[00:32:02] Mathieu: It, it's actually a super great question. Like when we started and we started to, to look for a potential like user or customer in the family office world and family office is, is, is a really closed loop. Like you have to have a little bit of insight to be able to get into this, this, this category of a user.

[00:32:17] Mathieu: We, we had a lot of people say, no, we don't, we don't do crypto, we don't touch that. The risk is too high or, or so on. And then over time we realize that as soon as we get kind of the trust of them. They're like, okay, yes, we deploy a little bit of capital in crypto. And the first thing was buying assets. So you buy ETH or you buy Bitcoin.

[00:32:34] Mathieu: And then in the last, like I'll say the 6, 6 to 12 months, we've seen people coming to us and say, okay, Matt, now I'm actually deploying onchain. We're like exploring this idea. And we've seen BlackRock and VanEck and Fidelity starting to deploy asset onchain. So family office, the beauty of this is that it's their money.

[00:32:52] Mathieu: It's not external money. So they, they're able to, like, if they wanna take more risks, they can take more risks. So we've seen a lot of family office actually being really interested in DeFi because they can see kind of, a good yield for, for them, and they can take the risk because it's their own money.

[00:33:06] Mathieu: So we, we are seeing more and more family deploying capital onchain. And that's good for us because they can use our, our infrastructure if they need the data for reconciling, reporting on their side. 

[00:33:17] Umar: So remaining on this topic of wealth management, investment management, I remember speaking to you a couple of months ago, and you mentioned that Octav also wants to provide some sort of a, some sort of investment management services for crypto startups. Could you tell us a little bit more about that?

[00:33:34] Mathieu: Yeah, we, we, over time we've started to work with some asset manager, onchain asset manager. 

[00:33:39] Mathieu: One example is Lagoon Finance. They are building some specific vault for family office. And then we started to, went to go to the Cayman and talk with a lot of family office there, and we realized like it, we have similar clients, so asset manager and us as as a data provider, we have similar clients. 

[00:33:55] Mathieu: So we're working a little bit with, with a lot of asset manager to see how can we partner and work together and, and kind of provide a bit of, advisory for family office. So it's something that we're exploring at as a company here at Octav, yeah. 

[00:34:07] Umar: So far at Octav, what would you say has been, some of the biggest challenges for you building Octav? I mean, this could be anything around marketing, sales, building a team, finding the right product, market fit. 

[00:34:21] Mathieu: Yeah. That's a good question. A lot of challenge.

[00:34:23] Mathieu: As a Founder, you have challenge every day. I, I think the, the biggest challenge, was probably like the perception of, of what's the protocol of what's the product. And let me explain to you, so when we were raising money, the first raise was done through friends and family, like the DCV Capital and all these people.

[00:34:40] Mathieu: And then when we wanted to raise like the, the seed round, we went to a bunch of crypto VC. A lot of crypto VC were like, hey like if you don't have a token, if you're not a smart contract company, we don't wanna invest because crypto VC often want to be able to, deploy capital in a token, get the token pretty quickly, the TGE in a 6, 12, 18 months if you're really, and then they wanna kind of like move fast on this.

[00:35:03] Mathieu: On the other side, the traditional VC, they don't wanna touch crypto because it's too risky. At Octav, we serve the crypto market, but we are more like a SaaS model. We're like, we, we are using like a SaaS model for payment and all this, so we don't have a token and we're actually in crypto. So now traditional VC didn't wanna touch us because we are crypto and crypto VC were telling us, well, you don't have a token. 

[00:35:27] Mathieu: And then so we've realized over time that like in, in 2021, 2022, 2023, it was really hard to raise for the type of company that we are. But like recently, I think a week ago I saw on, on Twitter, like the next real company in crypto are gonna be crypto company that generate revenue, real revenue.

[00:35:45] Mathieu: And we've seen it in the last, last 6 months, 12 months, where a lot of people are looking like how much revenue this protocol do. And so even if we're not a protocol now, we generate, like we generate revenue since like two year and a half. We can be part of like, oh, you're a real crypto company. Because you generate revenue, but you don't need the token.

[00:36:01] Mathieu: So I, I believe like the next round is probably gonna be easier to raise, because now people understand a bit more that they need tooling in the web3 to make sure that, that the platform exists, that, that the, the market can exist in crypto, so. 

[00:36:13] Umar: Now, you, you work with a lot of accounting and taxation firms, so for, companies to be able to, extract their data from Octav and then calculate basically their tax return. 

[00:36:24] Umar: I wanna ask you, how do you basically, also partner with like accounting and taxation firms and, yeah.

[00:36:31] Mathieu: Yep. Yeah, I mean, when I started Octav, like I said, one of the, one of the goal was to do my taxes. 

[00:36:36] Mathieu: A lot of like tax platform or sub-ledger, if you're buying and selling asset, they will work. If you're like, I'm gonna buy ETH and sell ETH in six months, that's no problem. 

[00:36:46] Mathieu: If you're doing DeFi complex strategy, so for example, if you wanna deposit USDC into Aave. But then you wanna take this collateral and put it into a liquidity position. This kind of composability is really complex for tax software and so that's why we partner with a lot of like accountants like that understand DeFi, because what they will do is they will use Octav to get the data of DeFi.

[00:37:10] Mathieu: Then after that, they're gonna use traditional tool or Excel sheet or Google sheet to be able to actually calculate the real, the real cost business and P&L and the real tax report. So for us, we believe that our client are a bit more sophisticated and therefore tax platform or sub-ledger won't work to provide, to produce a tax for them.

[00:37:28] Mathieu: So normally they will come to us, use our data, and then work with a professional tax to be able to really, produce the right tax, the right, the right, report for the taxes. 

[00:37:37] Umar: When you're speaking about, sophistication of clients, so what kind of clients would actually be using Octav if, let's say, if they have onchain activity, but maybe not so much into DeFi, Octav then maybe would not be that beneficial to them?

[00:37:53] Mathieu: Yeah, so if you're buying and selling a token, like you go on unis swap, you buy, eat, and then, or you buy any token that you want and you sell it, like it's pretty easy to track that. So if you go on any subledger or tax platform, it should work. 

[00:38:06] Mathieu: But if you are really deep into DeFi, you won't only do that.

[00:38:09] Mathieu: You'll take a loan, like I explained it to earlier, you as a treasury manager, you may wanna take a loan against your ETH into USDC. All of this is gonna be a lot more complex and therefore you won't be able to use traditional tax software. 

[00:38:21] Mathieu: So it's a, it's a smaller niche. At the moment, but like we've seen the DeFi market really growing.

[00:38:27] Mathieu: I think we're like at 120 billion maybe, maybe more at the moment. So we believe that this market, if you go on DefiLlama and you, you are using DefiLlama, you're probably one of our client. If you are, if you connect to Octav and you only see wallet, you're probably not a client because you're not using any protocol.

[00:38:43] Mathieu: So that's kind of the idea. If you are really onchain savvy or onchain sophisticated, then you're probably a client. 

[00:38:49] Umar: Cool. Now Mathieu so the topic of our episode today was on onchain treasury allocation. Has there been anything, that we didn't touch on, maybe that you would like to share with the listeners?

[00:39:02] Umar: Or, how would you maybe summarize, the episode today for the listeners? 

[00:39:08] Mathieu: I think, I think  there's a lot of education to be done for treasury management. Earlier like I said, we are, we're working with Safe to create all the safe that exists in the world, to see where the money is, to help them understand.

[00:39:18] Mathieu: And then we've realized 80% of the money in the safe are in wallet and not in protocol. So I believe that a lot of people, they have crypto. They will say, oh yeah, I do crypto, but they don't do DeFi. 

[00:39:30] Mathieu: So I think there's a lot, a lot of education to be done on the risk parameter, understanding the protocol and all the system, how they work together.

[00:39:37] Mathieu: Because there's a, there's a lot of yield, there's a lot of opportunity that, that people are missing right now. So I believe treasury management, understanding that make, make is super important for any CFO or any treasury manager. 

[00:39:47] Umar: There's the last question that I usually like to ask to my guests, Mathieu before they leave. It's like a tradition on this episode, or on this podcast, do you have a favorite quote or a maxim that you live by? 

[00:40:00] Mathieu: Yeah. Well, I'm a DeFi maxi, so it's gonna be around DeFi. 

[00:40:03] Mathieu: And I'll say the same thing, the, the beauty of decentralized finance is that it's decentralized.

[00:40:08] Mathieu: The nightmare of decentralized finance is that it's decentralized. It's awesome. You can do whatever you want. You can create any smart contract, you can navigate on any chain, but aggregating all your movement and understanding what you've done in the past is a nightmare. So DeFi is beautiful and also a chaos at the same time.

[00:40:26] Umar: Perfect. Thanks for sharing. And I also want take this, opportunity Mathieu to thank you for all the support, that you've provided at The Accountant Quits, I mean our work is on educating people new to web3 on how to manage a business using crypto. And your support has been phenomenal. Like I mentioned earlier, Mathieu is also an instructor, on the academy.

[00:40:47] Umar: And I, I really look forward to basically keep working and collaborating with you guys, basically to keep educating, and bring more people into web3 basically. So, I mean, this has also been a good topic for me to prepare today, and I hope the listeners, have benefited from it. If people want to reach out to you, later, or they want to learn more about Octav, where should they go?

[00:41:12] Mathieu: My Twitter is mbaril010. Telegram, my telegram is  mbaril010. So just go there. Otherwise come on discord of Octav, you can reach out and I'm gonna be in a bunch of conference during this year, so feel free to to come and say hi. 

[00:41:27] Umar: Perfect. Well thanks a lot for dropping by today, Mathieu and we'll be in touch.

[00:41:32] Umar: Thanks Umar.