Episode summary
Why LPs Should Borrow — Not Sell — Their Best Funds
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Yuval Rooz
Summary
Yuval Rooz argues that the real promise of tokenization is not speculative crypto exposure, but lower-friction market infrastructure for private and public assets. He says Canton is meant to make ownership, settlement, and transfer more efficient so LPs can use holdings as collateral, borrow against them more cheaply, and reduce forced selling when they need liquidity.
He draws a sharp distinction between blockchain and the business problems around it. In his view, many fund liquidity issues come from slow onboarding, capital calls, and distribution administration, while the biggest technical hurdle is standardizing contracts and data models across highly bespoke assets like private funds, loans, and alternative finance structures. He points to real activity on Canton, including Broadridge’s treasury repo application and adoption across tokenized U.S. Treasuries and other products.
Rooz also says inefficiency often persists because incumbents benefit from it. He cites syndicated loans taking more than three weeks to settle and argues that many markets are intentionally slow because float and friction are profitable. Looking back, he says he wishes he had taken more risk earlier in his career and believes young people overfocus on how they will look in 20 years instead of maximizing early upside.
Key takeaways
- Yuval Rooz says LPs should prefer borrowing against assets over selling them, because better utility and lower operating costs could make liquidity far less punitive.
- He argues tokenization only helps if it reduces friction in administration and settlement; blockchain alone does not solve DPI or distribution timing problems.
- Rooz says the hardest challenge is standardization, because private markets rely on bespoke contractual agreements rather than treasury-like templates.
- He points to Broadridge’s Canton-based treasury repo application as evidence of adoption, saying it is getting close to 10% of daily volume in that market.
- Rooz says inefficiency can persist because it generates revenue for key players, not because the technology is missing.
Notable quotes
“the only way for LPS for the most part to get money out is by selling their holding”
“if we increase the utility of these assets and you gave LPS tools to borrow more efficiently against some of their holdings”
“The blockchain itself is just a very advanced database technology. So it is just a technology”
“more than 80% of the time it's because there are certain key players in the value chain that have no interest in efficiency being introduced”
How the episode opens
One of the biggest headwinds in LP world is DPI right now. It's the hottest topic. Every every endowment, pension fund, foundation, family office is saying, I need to get capital return from private equity. Does Canton solve this problem over the long term? And if so, in what way?
Yes and no. Right? So, and and I'm I'm not going to be the person who says that everything with tokenization gets solved just because you tokenize something or you put it on a blockchain.
One of the challenges in doing for example like uh u you mentioned DPIs um is what does it mean to administrate doing that right so one element of that is when I think about these green field funds is can I actually manage my right my distributions my cash withdrawal versus deposits and I would say that that has nothing to do with blockchain right that's just do I have a strategy where the manner in which I deploy capital to which I can project cash withdrawals, right? So I can actually on a quarterly basis uh feed these withdrawals. Um do I have a business model that actually supports it assuming that I had zero friction in the underlying infrastructure and that is unrelated to to blockchain.
I think that there's a very big component of the infrastructure not being as efficient as possible to actually help administrate these things very efficiently because if it takes me a very long time to onboard new customers and do capital calls well then my capital distributions also will have this inherent uh latency uh in it. So I think that when it comes to the efficiency of these funds there's there's a lot and we're doing quite a lot of work there. I think the other thing and we talk about this utility is today the only way for LPS for the most part to get money out is by selling their holding.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- dpi crisis
- tokenization and liquidity
- lp borrowing vs selling
- on-chain settlement
- private market inefficiency
Companies and tickers mentioned
- Citadel
- DRW
- Digital Asset
- Bitcoin
Watch the episode
Watch “Why LPs Should Borrow — Not Sell — Their Best Funds” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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