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Stablecoins are the Present | X-Chain Mondays
Recorded: Dec. 11, 2023 Duration: 1:04:58Space Recording
Full Transcription
Justin, can you hear me okay?
James, yeah, I can hear you perfectly fine.
Awesome.
How are you doing today?
Doing great.
Good morning.
Good morning.
Good morning.
Any chance?
Hey, Shruti, I'll need you to go ahead.
Maybe I can mute chat.
Nope.
There we go.
All right.
Yeah.
James, any chance you can get the Reserve Twitter handle in here?
We can promote them to speaker and make it a lot easier for people to give them a follow.
all right i think we can go ahead and get started good morning good afternoon good evening everyone
i hope wherever you are in the world it's been a good day and i hope it continues that way
uh welcome to exchange mondays uh where we talk about all things going on cross-chain multi-chain
um pretty much just anything that uh in which an app can interface with multiple chains uh make a
real smooth end-user experience and try to remove the borders and boundaries of crypto we like to
talk about these things on mondays we got a real good one to talk about stable coins today if you
don't mind go ahead and give a quick uh reshare a repost about this space it'll help get the word
out um stable coins is just such a hot topic these days i can guarantee you your followers are
interested in listening we're going to be joined today with james from reserve protocol and uh just
a quick plug for next week so next week will be our last x chain space and we're going to just leave it
wide open for just a kind of a jam session so come with any questions you have related to anything
uh and we're going to just uh kind of free flow and see what the community's at and end the year on
uh um kind of like a end of year party let's think of it as that as a the end of year party to to wrap
all this up and then we'll come right back uh first january or first monday of january i think it'll be
january 8th actually since january 1st is a is a holiday uh james how are you doing sir
doing great guys good morning thanks for having us good morning yeah so i'm i'm excited to have
you guys i mean you guys are pioneers in the uh in the stable coin space so i really appreciate
you coming and joining us um let's just go ahead and start can you give so i think i'm looking through
all the the pfps and in the space so far it's uh pretty heavy on the icp community i'm wondering if
uh you could just kind of give a background on reserve protocol and uh give us the um the high
level uh of what you guys do yep uh so reserve protocol is um allows anyone to create a stable
coin or flat coin or index product fully on chain it's uh we call them asset-backed currencies or
r tokens for short um it's a permissionless platform so anyone can use it whether you're a
protocol or an app uh an entrepreneur a hedge fund a government a video game uh whatever it's available
to anyone platform is free to use it's deployed on ethereum mainnet and on the base l2 currently and
uh deployed on mainnet about a year ago and on base about a month ago as of today there's about
37 million dollars of tvl um primarily concentrated in about four r tokens however there's over a
thousand r tokens that have been launched on the protocol that's one of the really cool things about
permissionless platforms what i try to help people connect the dots on sometimes is to think about
reserve is to stable coins and flat coins and index products as what maybe youtube is to video
broadcasting or what shopify is to e-commerce right those are both permissionless platforms they're
not web3 obviously but but they're mostly permissionless and you know today there's 37 million
creators on youtube there's a million merchants on shopify of course uh when you look at power law
distribution a very small percentage of them usually about less than one percent are you know
sustainable uh businesses or or mega successful and you know the others are kind of mostly hobbyists
um hope that helps connect the dots for people to understand the protocol uh one more a couple more
things to say about it is everything's on chain all the asset backing for these r tokens is on chain
locked in a smart contract the over collateralization is on chain that's essentially a first loss capital
fund to protect the r token holders in the event of a bank run or a black swan event um and uh revenue
is programmable on chain everything's you know fully on chain uh i'll stop there see if any questions or if
that made sense yeah no made made complete sense uh or at least i think it made sense let me let me ask
some clarifying questions i love the example of youtube and specifically how youtube disrupted
what might be called like the traditional broadcast system so you're like your your main television
um uh you know stations where you maybe had three or four television stations that everyone watched
that was very centralized and then youtube made it so that anyone could kind of launch uh their own
little um mini station i guess is that kind of a good analogy for a reserve right you have like
usdc and usdt like these big behemoths and you guys are saying no it shouldn't be just one or two
found like organizations behind this i think that's a good framing you know um the back in back in 2005
when youtube launched actually i worked for uh i worked for turner broadcasting they own cnn and
and tbs and tnt and a bunch of popular channels at the time and back during that time to launch a
uh you know a broadcast network it costs you about 10 to about 100 million dollars to launch a tv network
um when youtube came along it became free and you know uh i i forgot that great quote where they say
at first it looks like a toy um but now you know youtube is the most powerful video platform on earth
it's far larger than turner broadcasting uh and ironically you know executives you know big fancy
tv executives back then they laughed at youtube um they didn't think it would be very important in the
long scheme of things but you know what you've gotten now out of something like youtube what's what's
interesting is if youtube had have decided to program all of its own channels versus what you
see today where you've got you know your mr beast or whoever your favorite gaming influencer is or
whatever you wouldn't get near the level of creativity and innovation um if it were done in a centralized
way by you know a centralized programming team um that's what these permissionless platforms do they
unlock creativity and you know bringing this back to stable coins you know a lot of folks might say
well there's going to be one stable coin to rule them all um you know and you know maybe it's tether
maybe it's usdc because they're already out in the lead um i would argue against that and say um i don't
know how old all the folks here on the call are but back in the mid 90s there was a a tech unicorn
company called america online aol and uh it was one of the biggest it was one of the first unicorns
and uh very you know the people who work there and you know uh investors everyone was very proud of it
in the mid 90s and but aol doesn't really exist in any material way anymore uh anymore you know most
people don't care about it a lot of people have never even heard of it it's a it's mostly irrelevant
it's been swallowed up in some other internet companies and the brand has gone away i would say
we're in kind of what the aol era of stable coins you know and what what's probably going to happen
over the next decade or two and you everyone who's on the call already kind of gets this we're in this
sort of great unraveling of the financial system you're right everything's getting picked apart
and reinvented maybe with some cool new features you know being able to do things without sort of
doxing yourself being able to use defi being able to get access to services without having a driver's
license or a home address um that's a really unusual sounding thing uh especially for a lot of people in
the world right now but there's but there's also a lot of people who don't have a driver's license and
would like to get access to financial services um but yeah bringing it back to stable coins i'd say we
are in this sort of aol era of stable coins that uses um what i'd call maybe industrial age paradigms
you know we've all talked about uh store of value uh medium of exchange unit of account but when you
start to look at like what digital technology digital permissionless technology brings to money um you
you you we're on this sort of precipice of what might what it what has already happened to the
broadcasting business what has already happened to the e-commerce business and is happening right now
with the the the money business so to speak you go to coin market cap there's whatever 15 or 20 000
tokens there that didn't exist 15 years ago so the the explosion the expansion is already underway
um and something some things in there are going to become really important assets for the future
um we'll see what that looks like but i think that's one of the really exciting things for stable coins
is the programmability and different use cases for it um and and essentially you have the cost of
production going to zero thanks to digital permissionless technology you have the cost of
distribution essentially going to zero thanks to digital permissionless technology and when you do
that you can connect more sort of buyers and sellers more users of the two-sided marketplace for money
and you get all kinds of like niche opportunities that arise and and can become big all by themselves
i i love that answer um i'm old enough to remember aol i remember going to the mail and and
looking basically for those cds that they would send you in the mail to get like 300 free minutes
on the internet um which is just kind of one of those memories to make me remember like holy cow
where how far the internet has came in the last what is that uh it's almost about 30 years i guess
um i'm kind of trying to work with that analogy right i love i love how you said you know basically
the internet needed back in the 90s the internet needed an aol right a big behemoth to come into the space
to figure out the marketing um aol was both a connection right so you could use your phone line
to connect to the internet but also had like chat rooms it was like you know if you remember instant
messenger class the classic aim um it was like the first example of like a social media uh you know
with the instant chat and and so i guess that's a great way to think about usdc or usdt is like
these are the behemoths they've kind of established maybe a product market fit um but they they you
know in the same way that aol couldn't compete as the monopoly over the internet um almost maybe some
innovation is going to drive uh the the fragmentation of the market
i think so i i think essentially what we're going to see is a very long tail
of stable coins uh some some on the call might remember a book written by chris anderson in the
early 2000s called the long tail uh actually it started as a blog post then it became a book a few
years later 2006 and the long tail essentially explained all of these new businesses that have
popped up you know amazon makes a lot of its money from the long tail um obviously ebay and etsy if
you're familiar with those businesses those are all long tail businesses of connecting buyers and sellers
and and that's what digital technology allowed it allowed you know allowed this sort of uh relationship
where anyone in the world could connect and buy something and then have it shipped to them a few days
later and you're starting to see that in these different sort of money systems
you know again where if if the cost of production the cost of distribution are going to zero
you can then kind of connect supply and demand all over the planet um you know i live in the united
states we're we're very fortunate you know i can have five different bank accounts if i want to
um but there are people in the world you know like a billion plus that don't have that access
and um that's really who i think these technologies are especially for are the ones that are either
completely not served today or or just underserved um and um you know with with as i mentioned this
idea of like a long tail of creating different types of assets to figure out what might be the next
most important iteration of of money and it might be something that emphasizes privacy it might be
something that emphasizes um uh yield you know for the holders uh you know i think usdc and tether are
both interesting example first movers but they keep all the revenue for themselves they don't share it
um whereas um you're seeing a lot of new yield bearing currencies come online whether the yield is
coming from u.s treasuries or coming from other defy assets that's a pretty cool value proposition for
people to be able to have something like a flat coin like a defy savings flat coin where they're getting
you know uh six or seven percent yield per year beating the rate of inflation in like a hundred countries
around the world um that's a that's a really cool value prop and um you know you might start to see
some folks maybe move out of the traditional banking system that's paying them far less yield
and move into something like that or or groups of people who've never had bank accounts uh kind of
start there natively um really interesting prospect for the future of money going down that road of the
long tail um in terms of how reserve is used are you guys are your customers so obviously your
customers are probably um you know uh folks who want to launch a stable coin right is that correct
yeah we we kind of have two main constituents um one is you know people who want to launch
um uh our tokens launch asset-backed currencies and and you know the tools are are free and they're
permissionless so when i say constituents it's almost um you know it's not like your usual kind
of web 2 relationship where you'd say oh these are my customers but um the people that are kind of
interested in launching you know stable coins and flat coins and index products they range from
protocols like mobile coin who launched the electronic dollar on reserve protocol to stake dow who launched
usdc plus on the reserve protocol to uh an anonymous entrepreneur who launched high yield usd
on the reserve protocol um and those different a good way i sort of think about those different
constituencies is their sort of defy nativeness versus you know being fully off chain you know um when
you think about like go to market and growth and who might use these things in 2023 versus maybe 2030
it's really going to be the the true believers who've just gone through this uh rough bear market
that are believing you know regardless of what the news cycle is and they're defy savvy so they're
comfortable uh they're okay with you know maybe uh a user experience that's not quite as good as bank of
america or wells fargo or something like that but in the future that user experience is going to get a lot
easier and as it does and more institutions and governments come on chain which you know i think
this big movement around etfs will certainly be a big catalyst there um you're going to start to see
lots of those different groups wanting to utilize this technology you already see them
kind of getting active with more centralized um implementations but i think over the long run
decentralized implementations are going to become far more interesting uh in terms of how you can drive
network effects and some some unique benefits to um you know using it in a decentralized way versus
kind of doing business as usual in the uh the the web too or or even kind of the industrial age sort of way
so you mentioned three different use cases which um in my mind were like the same use case and so
it's almost kind of like you've just expanded my mind already because i'm realizing that there's um
that that my framework is small so you mentioned three ways of uh basically like a u.s dollar backed
stable coin right like probably a traditional one and then you mentioned usdc plus and then high yield usd
is that um is that kind of common and i assume like the high yield usd is is it's backed by let's say
like high yield bonds denominated in in usd is that am i kind of understanding that correctly
high yield usd is booked by is backed by yield bearing defi stable coins so you know one of the
ways that you build um asset backed currencies today is you need collaterals that have sufficient
liquidity on chain and are sufficiently uh they could be decentralized or even centralized you know
once you once you've deposited usdc or tether into compound or ave and you get that receipt token out of
it that's now a yield bearing asset and it actually has some interesting censorship protection
um because it is um kind of a derivative of one of these lending protocols so those are the types of
assets um i i don't have the basket directly in front of me but if you go to register.app right now
you can check the selection box for high yield usd and you can look exactly what the collateral is
backing uh high yield usd on ethereum and on base but but backing that um black coin today
are yield bearing uh derivatives of of other stable coins um we are sort of entering this
era where you'll be able to build these asset backed currencies backed by all kinds of commodities
um stocks bonds uh real estate um but the issue is a lot of those assets today are not of sufficient
liquidity on chain and in some cases they're not permissionless assets um to build our tokens in the
reserve protocol you really want to be using permissionless asset backing um and i recognize
there is a fork in the road that's kind of defining itself right now with a number of projects that are
only used building out permissioned whitelist assets and then a bunch of other projects that
have permissionless assets we're uh our tokens in the reserve protocol work best with uh permissionless assets
yeah i guess that was going to be my next question in terms of scope was um because you know you say
like like a stable coin most people think fiat stable to a fiat but there's really no reason why it
couldn't be stable to any financial asset and it sounds like the gating of that is uh is is having
assets that are tokenized and permissionless so you could almost have like a real estate backed stable
coin that's back to maybe the local real estate of a community and and that might have certain
advantages to it um is that kind of like am i am i understanding it correctly yeah let me tell i'll
tell you about two uh really interesting r tokens but i'll tell you kind of longer term like what's possible
and what's exciting you know our challenge these days uh are there are several governments that like
to print money and cause inflation and if we look back through history uh that doesn't last forever
for any government in history uh there's always a breaking point always has been and probably will
be in the future um and so what's interesting that you could build is you could build a uh a stable coin
uh that's backed by a hundred different assets inversely correlated assets that are relatively stable over
time and what you get out of that is something that is based on the actual value of the assets you know
the the actual inflation of the assets versus a methodology that might be affiliated with some
towards some some type of money printing scheme uh by a government you know there could be some
geopolitical uh influence that that causes it to go one way or the other um those hundred different
assets backing this reserve currency they could be from different jurisdictions around the world so
some of them those assets could be defy assets fully decentralized could be ethereum for example
and some of them could be real estate that's been tokenized out of switzerland or it could be gold
that's been tokenized out of singapore and so once you've really sort of dispersed the surface area of
this basket one of the things this allows you to do is well first of all it follows that rule we've all
heard of which is don't put all your eggs in one basket now that you've got this distributed basket you
can have any one asset in the basket fail it could fail 10 percent it can fail 100 but the currency
overall can be resilient and it can be self-healing particularly if it has some safety mechanisms
to cover any type of you know part of the basket failing um i think that's one of the things that's
really exciting and possible in the future and that basket by the way that could be a blend of
you know currencies like yen won and us dollars it could be commodities like gold and corn could be
real estate could even be you know potentially art and certainly should be probably some some interesting
defy assets and maybe some bitcoin that's what i think is really going to be possible probably by the
end of this decade it will take a while to get there for all of those assets to come on chain and be of
sufficient liquidity now zooming back to today right now on the the reserve protocol the the high yield
usd flat coin it's dollar denominated it started at a dollar peg but it will probably earn some yield and
distribute to holders at the rate of you know uh i think maybe up to four to six percent per year i
haven't checked exactly what that number is as of today obviously it changes during market conditions
but you can you can go look at the yield of high yield usd at register.app which is like the token
explorer for for our tokens but let me tell you about a different our token um there's one called eth plus
what is eth plus it is eth it's a basket of lsts uh right now it's lido staked eth and rocket pool
leaf uh it gives the holders like up to about four percent uh yield per year um but what it brings
that you don't get by holding lido staked eth or rocket pool leaf uh naked is you get diversification
in the basket and you get this over collateralization this first lost capital fund uh should there be any
type of dpeg event in the future um some people will be interested in that um others may say look
you know i'd just rather hold naked light uh lido staked eth and both of those paths are perfectly
fine um eth plus is a stable coin it's stable in relation to the price of ethereum by the way so
it's pegged to the price of ethereum um so yeah that's kind of like the twist on the definition
of stable coin i'd say yeah i've always kind of laughed because uh it it does seem like you could take
really any bridge token and call it a stable coin as long as um as long as it's secure enough to
maintain the peg uh it it's just stable to bitcoin or it's stable to ethereum or whatever whatever it's
backed by um well let's go i want to open it up to questions from everyone but also want to introduce
our other guest on the show is doxa dollar uh um they're building a stable coin on the internet computer
and uh doxa do you want to give a quick one minute uh summary of what you guys are doing
you're still uh muted if uh
or maybe maybe doxa stepped away from from their uh device for a minute actually let me ask that while
while we wait for doxa uh james are our reserve are our tokens are they erc20 compliant or what's the
what's the back the technology background that's right they are erc20 tokens um uh for now um you
know as we look to deploy to different chains in the future you know that could change a little bit
um i'm not a technical guy by the way i'm business guy so um but if uh if anyone like to sort of drop
into um you know like the reserve discord and exit you know kind of more explore the canvas from a
technical perspective um there's uh several of the core team contributors are available there
to answer questions but yeah it is an erc20 our tokens themselves are erc20s and the collaterals
that back them are erc20s okay okay perfect and then uh uh chira we'll we'll bring you on up here in the
meantime actually james just give us a quick how you know if you just basically dropped a whole lot of
knowledge on reserve um and i'm sure there's a lot of people who are going to be interested in
learning more how what's the best way for them to follow uh follow you guys and and uh learn more
yeah best way is uh you know on twitter uh reserve protocol um there's a link tweet link tree on
twitter and you can drop into our discord from there um or uh go to the website reserve.org
awesome awesome awesome definitely check them out uh doc so we got you back up here
maybe still having a little bit of technical difficulties it's uh you know monday twitter
has its own mondays uh so it it sometimes takes a little bit of time to get back from the weekend
uh cheer are you with us
yeah oh there we go there you go how are you doing
i'm on yeah you're on you're on i hear you're a couple seconds behind us i think
all right well why don't we wait for uh uh docs's uh audio to catch back up cheer do you have a
question and anyone else out there if you have a question on stable coins feel free to go ahead
and throw up the speaker request uh we'll pull you on up here
kyle i have a question sure sure yeah let's how are you guys yeah oh go ahead okay um i was curious uh
i've been following definity for several years now but um you know not as we all know these these
projects are quite complex and and evolving i'd love to hear like what the latest is for
definity and how y'all are thinking about stable coins and what might be important for your ecosystem
yeah i mean i would say um stable coins is a huge area of opportunity for the internet computer
um and one that we haven't done a very good job of exploring um we've been more focused on
uh basically what you might call a protocol bridges or or direct protocol integrations um
so we completed a direct integration with bitcoin um earlier in 2023 and we're probably going to
finish up a direct integration with ethereum in uh early 2024 and what that then does is allow for
any app to directly leverage both of those protocols um and so one of the we we're still kind of working
through like exactly what stable coins would mean in that context but one of the nice things you can
do then is um utilize erc20s um basically have kind of like a protocol bridge to any erc20 uh which
would actually make it so that you know any r token could could um leverage applications built on the
internet computer um and and which i think introduces from our perspective the internet
computers uh you know we our goal is to basically be like a decentralized aws right we just want to be
a cloud hosting we want to we want interesting uh innovative apps to be deployed uh leveraging
blockchain uh completely hosting data 100 on chain hosting their front end on chain and so from that you get
these great social media apps that have launched that are very distinct uh relative to like a web 2
alternative they're very they're they're starting to really venture into innovative spaces um you have
like game five really starting to kind of like kick off and so from our perspective it's like stable coins
is a perfect example of uh how those could be used how they could be used outside of defy uh but we haven't really
fully uh launched yet so i mean i i'd be happy to kind of like go down this road and and and chat with you about um some you know just
ideation on on how uh stable coins could impact the internet computer ecosystem yeah totally would love that i i i think i can't recall
what i was reading last night um actually i remember exactly i was listening to a podcast yesterday i won't
name who all was on it but um you know folks were talking about and and they're right you know things
do need to be faster and cheaper um and decentralization has not really uh been highly valued outside of our
small bubble uh for the people who've weathered you know various bear and bull markets but what i'm
excited to see over time is is what can decentralization unlock because thus far it does sound like a buzzword
and maybe a lot of people are exactly you know waking up every day and saying oh my god i need to
do more decentralized things but i'm really excited to see sort of the benefits unfold from it and we
definitely believe there are some you know whether it's how network effects can grow more rapidly or
people can have a wider access to some of these products so um i would love to explore that with you
yeah i the the term decentralization we could probably spend like an hour talking about that um
and i would agree that decentral we we within web3 or crypto or whatever you want to say we use
decentralization as if it's a feature um and i don't think that there's really any consumer out there who
appreciates decentralization as a feature but rather what decentralization gives you so it could be
that it improves security right you're you're less likely to get uh rug pulled in a decentralized uh
ecosystem or um perhaps it it unlocks partnership opportunities because um it can level basically the
playing field between two different partners or three partners or even 10 partners right um there's
also decentralization um oh gosh now it just escaped me um but but it always seems um that if if your
your purpose is decentralization that that's not a that's you're going to struggle to find a product
market fit for that however you can build innovative products leveraging decentralization as as uh
um as the way that you get to that innovation
so in in the works in the world of stable coins right innovation right there like like you guys created
a permissionless uh platform and that allows you know that allows for you know like um anyone who has an
innovative idea to come onto your platform and launch that idea now 90 95 of those ideas might be bad ideas
and they never take off but the five percent that do take off are going to be um you know you have a
much better chance of having um some hits because you've got a lot more shots on goal a lot more
diversity and thought it doesn't require a central group of people to sit here and sit in the conference
room and think of 10 different innovative ideas to use your platform instead you guys just
crowdsource that and allow anyone with an innovative idea to come on and try it right
yeah i think that's the very exciting part that it you know initially in the earliest stages it's not
necessarily faster but over the long run permissionless access and creativity um can be much bigger um
and and you know uh ultimately manifest in ways that you know the original creators didn't expect we've
actually already seen this on the reserve protocol at different uh points in time where people have
created a stable coin that's got like a tiny percentage of wrapped bitcoin or ethereum in the
basket so that you can essentially kind of cap your downside of uh you know as we know bitcoin and
ethereum are fairly volatile um uh but you can cap the downside of that impact in the basket but of
course bitcoin and ethereum uh when they swing wild they they go in both directions um so it becomes
like an interesting kind of asset to think about as you know essentially a flat coin um i don't think
that was anything we contemplated early on uh but it's been really interesting to see the community
uh kind of roll up and and bring their own ideas to it yeah it's hard it's i mean it's it's exceedingly hard
to predict predict what uh even in a stale market like what what direction the market wants to go in
and then crypto is so dynamic um i mean i was just talking earlier this morning with um one of our
partners in india talking about how you know their exchanges one exchange will be really big for two
or three months right and all of this liquidity flows through it and then you know three months later
it'll be like well they're not really you know big now now the trend is this other exchange and so it's
like it's almost like a whack-a-mole with uh what the what the industry wants or what the consumer
wants and so it does seem like you have to have this dynamic ecosystem where ideas can flourish
trends can move from one to another and you can let the market kind of dictate you know who would
predict that uh um you know a flat coin with just a little bit of bitcoin exposure or a little bit of
ethereum exposure would would be what the market wants but there you know it's it'd be hard to
you know it hard to predict that but the fact that somebody can launch it and the market can say
like that is what we want is is what you really what you should have from a at the at the protocol
level or at the platform level right i think that's right yeah um yeah what about in terms of um
because you've mentioned a whole lot of future trends like uh thinking about like 2030 what do you
you know as we turn the calendar for 2024 what do you think will be the big trend in stable coins
next year specifically
good question um
trying to think about how to time box that to specifically what could happen next year i i definitely
see this sort of coming explosion of yield bearing stable coins uh as an as an alternative to
you know something like a usdc or tether where uh you know the funding sort of stays uh essentially
rolls down their pnl um
you know i've been sort of increasingly interested in a few different projects that have been launching
with uh perps in the basket um you know uh where uh essentially there they have a short and a long
position to maintain stability um i need to learn a little bit more about those uh to be honest
um but i think those are you know both very interesting concepts i guess probably for the
next 12 months you know what is maybe the big question mark is is this the moment where we could
see a large influx of new users into crypto and i think with uh all of these etfs that seem to be
gaining steam uh the answer might be a solid yes uh there could also be a lot of other users from
retail um so i'm very curious and as to what types of different stable coin products they may
want to use you know is it the incumbents like centralized tether or usdc or is it something uh that
has uh features a different set of features like privacy or um you know uh bearing yield for the
holders um i've talked to at least two projects one of them we work with that have are launching
stable coins on privacy blockchains and that's interesting right if you think about wait a minute
a a dollar stable coin that's private and encrypted um that could be concerning you know for uh you know
reasons of preventing any type of illegal activity but there are actually ways to do this in a
regulatory compliant way regulatory friendly way um that also protect the privacy of users um
and if y'all take a look at uh electronic dollar which is the one that mobile coin uh mobile coin
launched electronic dollar on the ethereum mainnet and it was bridged to the mobile coin blockchain the
bridge is a regulatory friendly bridge so that um you know compliance checks can be in order but the
users can use the money um in the mobile coin ecosystem uh on their app i believe it's called sense
now it just rebranded s-e-n-t-z um uh and mobile coin has some other relationships uh that uh with
with other messaging apps for being able to send money so i think that's a really interesting use
case to be able to send and receive money in a in a truly private way um so that could be you know
maybe an interesting trend for the next 12 months we'll see we'll see how important that becomes
you you mentioned uh the bitcoin etf and and obviously there's been a little bit of um not
quite the same but a little bit of buzz over an ethereum etf in the united states and that actually
now has me thinking given what you're saying about um having uh you thinking of a stable coin as you know
it it almost kind of strikes me as like you could take a stable coin and it can serve as a
a web 3 version of an etf because it can be a basket of either commodities or real world assets
or um you know other cryptocurrencies things like that and i'm wondering actually if there's maybe
a world in which you have these stable coins that then have their own etf that appeals to people who
actually don't really care about the whole crypto side of it they don't want to self-custody they
don't want to do they don't want to mess with anything but they want exposure to the assets
that are backing them in a like a web 2 or a traditional finance manner and they also maybe
want the transparency that web 3 brings them so they can kind of see like the exact basket the flip the
flows of of uh the asset going in and out of um in and out of the stable coin and understand the peg
uh be able to verify the peg is that i don't know is that something that you could imagine the world
moving towards or is this just uh is this just kyle kind of uh combining a couple different uh uh threads
there super awesome question and and you you give me another idea this year as well but
because i've been looking into this a lot you know why haven't index products really taken off in crypto
thus far um and short tldr is because we're early you know crypto is used by like less than one percent
of the people on the planet thus far but index products you know where you could essentially
create something that is a basket of bitcoin ethereum gold maybe the top 10 coin market cap
um you can already do this today uh i think index coop has some products you can build our tokens that do
this um i think i saw a16z just funded a new company that's going to build index products
so it's coming you know what i've been fascinated with is why isn't it already here why you know
from an adoption standpoint the technology is actually uh relatively easy or or present today
but adoption hasn't really taken off and i think as you uh all of us here on the call have probably
been at that conversation at the meetup or at the dinner where you know there's someone saying
you know it's only going to be bitcoin or it's only going to be ethereum you know kind of the tribalism
stuff but i think you're going to see users who say look i really don't want to uh run the risk of
getting my wallet hacked or phished uh i don't really want to spend a lot of time you know should i be
half in this and two-third or or a third in this what you what would be really cool is just to have
one asset where um you know has some degree of curation around what goes in the basket and there's
lots of different ways to solve that where you can just pick up an index product and have exposure to it
but you know not spend your nights and weekends uh worrying about it you know rebalancing it making
sure that you don't get phished that you don't get hacked um and i think that's what index products
have brought you know to uh financial markets many decades ago and and you know is a very large
business in trad fi um so uh i think that's a super interesting prospect i will tease up one other idea
that's exciting for stable coins but it it probably is not a next 12 months idea which is video games and
metaverses um for all the web3 native video games we've seen thus far um many of them have a currency
but it's a volatile currency and i think something that folks have been learning for the last five years
is um volatile currencies are not great currencies uh for any ecosystem um for the most part and so you
know we think um video games and metaverses are going to want something that's stable and they're
probably going to want something that's actually decentralized um because if you're trying to build
a great video game or a great metaverse the last thing you also want to do is be a bank um you know
being kind of a centralized bank uh you'll have lots of uh regulatory compliance that you need to pay
attention to you know to to stay in line with the law and so you know we think in the future maybe um
some of these environments video games metaverses may want a currency that's stable and also
decentralized um fully in smart contracts i think that's a super interesting prospect and if you've been
following along all the conversations around network states led by biology and i think vitalik has talked
about it a little bit um you know network state is essentially a social network it's kind of a
metaverse depending on how you define metaverse again uh we think they're going to want a stable
currency not a volatile currency and it's they're probably going to want it to be decentralized uh
for that group i think that's a super interesting prospect
yeah actually oh gosh we should have a whole nother space for the network space and
our network state and how that could uh leverage stable coins uh going back to the idea of tribalism
and i want to kind of connect this with um your question before about how you know we within the
internet computer kind of see this happening um we you know one of the things that strikes me as odd
is that um the we have like there's like there's no such thing as like a maxi in the real world like
i'm not there's no one who you know says i only use you know uh applications hosted on aws or i only
use uh you know ones that are on google cloud and you don't have necessarily like currency maxis it's
not like when i go to europe i refuse to use the euro because you know i'm a usd maxi um so like within
crypto the idea of tribalism is only kind of like an outshoot of i don't know the early days of how like
things were marketed and community building and that kind of stuff and so um you know from our
perspective it seems like uh you you what you what the industry will move towards is applications in
which the the the chain or even the the uh cryptocurrency that's being used it almost gets
extracted away right so like you're saying with gamefi you know you if you're if you're as a consumer
if you're using uh if you're playing a game you don't want to have to worry about like do you have
the right token in your wallet do you have to switch and all that kind of stuff you probably
want that just abstracted away and the app developer can just basically handle the swap in
the background and they have the tools to do that um and that's that's kind of the the world we see and
i'm kind of working through that with you know with what reserve does if you have this long tail of
currencies um that really would allow especially the ability to swap between them pretty pretty
seamlessly um that would kind of unlock the ability for somebody to maybe uh leverage um leverage a
currency to their own let's say to their own fiat that they have in the country they live in but
still use a game that's worldwide and not have to worry about the conversion rate and all that like
basically that could just be abstracted away and the developer of that game can also then just
have a way to receive the token in their native currency so that then when they want to use it
in real life or or whatever that it's um it's more seamless i think that's really where we have to get
to is that from the end user's perspective a lot of these things are abstracted away you don't have
to feel like you're encumbered by just one chain or one token or something like that and and you can just
focus on the the end user's experience is that is that kind of resonate or is that am i
my my way out i'm fully aligned with you on this it's uh you know we're in this stage where the
early uh i know it sounds weird to say it's early uh bitcoin was 15 years ago uh ethereum i guess is
about nine years old if i remember correctly um the the folks that are sort of involved now we we are
the tinkerers we are the technologists we are the curious we are the hobbyist and for us we're pat
you know we can be passionate about different ecosystems but but when we get to uh 10 penetration
and 20 penetration globally uh those people are maximalists of cheap fast and good period
whether it's you know aws under the hood or some other blockchain uh type thing those are that will
be sort of washed away and it will be these killer applications maybe video games um that will
matter the most and and interestingly i think there's another stage of stablecoin evolution or
or money evolution which i'm also i'm kind of going to uh critique uh the path that that we've set out on
yeah and you know who knows if this happens i'm just totally speculating you know as i mentioned we
we've been we're using industrial age money with limited applications uh thus far the medium of
exchange unit of account store value you know these are the kind of the primary uses of us dollars and
most currencies around the world now we're moving into this digital age of money where um the financial
system is going to unravel over several decades and sort of maybe recombinate in some some way and and
at various times there'll be you know oh this looks like a winning stablecoin that looks like a
winning stablecoin but we're one of the things that's really interesting with this digital technology
is we're getting to a point where you can exchange anything for anything in real time and um and
that's uh and for that to be really simple to do um so what could that look like a hundred years from
now you know i could we could actually go back to the barter system and you could trade me two goats for
you know uh a lifetime supply of eggs and horses um uh i don't know if that's what will be the
currency a hundred years from now but but what this digital technology enables that's quite interesting
is well what comes after a globally agreed upon currency when you can actually trade anything for
anything in real time you know the reality of why we have why we have these sort of globally agreed
upon currencies because it just makes it easier for the analog world to transact but now we're
moving into this digital world where it's going to get easy to transact anything for anything so um
i think that's a long long ways away um that could be you know maybe a hundred years or more away
and who knows maybe it'll be solved by an r token with a basket of all of those goods or maybe that
future is uh people trading anything for anything in their spaceships on the way to mars
james you can pry my uh you can pry my two goats out of my cold dead hands i'm not bartering those away
um we got uh doxa has been uh dm and saying he's got his connection issues fixed are you still are you
there doxa i think uh maybe uh maybe still some a few more um uh connection issues but plug we got you
pulled up here do you wanna uh you wanna uh give your two cents uh hi yeah i just wanted to ask some
question or get get some insights first of all some fantastic points being made like i love i love the
kind of long-term vision of uh potentially this could end in kind of a bartering system getting
created but i think we're uh sort of a way away from that and i think that's fair to say
but in that but potentially we're closer to something else and i'm curious to hear your thoughts
uh we have your melee was just selected in argentina first day as president we're seeing what's
happening in el salvador could we see kind of an emergence of these uh high inflation hyperinflation
countries as they try to move towards the dollarization adopting stable coins instead of
kind of negotiating with world governments to to to have cheap fast dollar value transactions on chain
in their countries available to anyone i'm curious to kind of see what um what everyone thinks of that
or if there's any insight that i'm missing i love this question uh do you mind if i take it kyle
no go ahead yeah and i apologize i i do we'll have to drop in about five minutes but um great question
plug um you know javier in argentina has talked about adopting the us dollar and getting rid of the
argentinian peso um and i imagine that comes with some strings attached uh which will if that does
happen we'll we'll see what that is in due time but the real opportunity i think for argentina
is to have its own uh asset-backed currency uh to really leapfrog how people are thinking about
stable coins today to leapfrog some of these centralization sort of paradigms now that would
be a pretty huge jump for a government to do that uh at this stage but then again uh el salvador adopted
bitcoin as legal tender a few years ago so maybe it's not that big of a jump but argentina sits on
a number of different natural resources that could be tokenized and uh and argentina's had quite a few
challenges with inflation and hyperinflation over many decades um my hope is is that that government
will take a close look at its options not just going for um the us dollar um you know which which
usually does have some strings attached and you know might look attractive in the short run but
you know who knows what that looks like in the long run i think there's another good example too to
talk about which is the state of wyoming here in the united states um they also are looking to create
a government sponsored you know state government sponsored stable coin um that will earn yield and
return that yield back to their treasury to fund schools and things of that nature um i'm actually
going to publish a blog post on it this week um for you know to hopefully get them to think differently
um they too are kind of picking the centralization paradigm um so uh without taking up too much air
time i i think there's a really exciting opportunity for places like whether it's el salvador or argentina
or the state of wyoming in the united states or or other countries um you know i i wish crypto uh
adoption and innovation were a little bit further along and people really understood decentralization
we're going to go out and make those arguments for them to consider it but but i could see you know
governments tend to move slow so it could take uh could take another 10 years yeah thank you thank you
for having me kyle by the way yeah james thanks so much for joining and uh let's let's chat more soon
again when we get the uh erc20 um integration we can uh we could port all the our tokens over to the
internet computer as well and and really uh join the two ecosystems so i appreciate uh appreciate
your time and we'll have you on another time um mutasco i got you got your hand up you want to go
ahead and um and james feel free to drop if you got a drop appreciate it appreciate all you did hey thanks
all right mclasko hey thanks kyle um i actually just had a question quick question for um james uh i think
yeah he's getting off but that's fine i was going to ask him if um because everything he's talking
about it just flashes my ears on the sdr by the imf the special drawing rights uh the structure and the
composition of it and the question i wanted to ask him about reserve and our token had to do with
competition um i think uh earlier in the spring um the dcma which is the digital council is it i don't
know what the i think is digital currency monetary authority dcma they had launched uh the the umu
with whatever it is the umu coin which is universal something currency coin not sure if you're familiar
with it but the competition that that poses because they're structurally trying to take advantage of
the member member states uh under the imf and their risks of their local currency um volatility and
devaluations and all of the the complexities that we know are you considering jurisdictional
compliance and also extending that type of service to nation states uh because there's the element of
trade payments that will be involved if that currency has to be used um in the way that you described
it and i'm sure you you'll have to get off but as i was listening to you that was what came to my mind
and i'm wondering um the structure of his um the just just the exposure that this may have and the risks
that that would would would um would impact its adoption i don't know if it makes sense cal
yeah and i'm not sure i'm in the best position to answer that question so i um uh i think if
probably if you ping james uh you may be able to answer in a dm um but yeah we're the icp community
is fully aware of the sdr um you know that's uh how that the the coin or uh token that you use to
pay for computation on the internet computer is um pegged to the sdr so we call them cycles
but uh i'm not quite sure how how that you know to your question like how that may may impact uh
from that perspective i think uh i'm trying to see doxa doxa's been having some problems um i'll just
give uh so doxa dollar is building a uh um a usd stable coin on the internet computer i just say follow
follow the doxa dollar um twitter handle to keep up to date on what they're doing i'm scrolling
through the comments there was one question from somebody asking when ck usdt uh usdt usdc
um you heard james say all the r tokens uh are they're all erc20 compliant and i believe we should
have uh ck erc20 um by certainly by the spring of 2024 so we're maybe just a few months away i don't
want to put an actual date out there because i know uh the r d team would uh strangle me for for
holding their feet to the fire but uh but yeah once once ck erc20 is launched then at that point you
could have ck anything uh that's erc20 uh compliant so uh we're soon and there should be um
a wash of uh stable coins ck stable coins on the internet computer at that time
um ladies and gentlemen i think that's going to wrap it up for us unless i see anyone request
to be speaker in the next couple seconds um i want to thank you for your time uh again next week's uh is
going to be an open open mic so feel free to join we'll do a little year-end review a little 2024
peak uh preview and uh talk anything you guys want to talk multi-chain so um i bid you all farewell
and thank you so much for your time goodbye
Host
DFINITY
from
Internet Computer
