Are Stablecoins Even “Real Crypto”? | Ria Bhutoria - Delta and Annika Lewis - Eco

[Music] hello everybody Welcome to The Ether night stage next up we have our stable coins even real crypto um welcome to the stage Ria and anakah uh great to have you here I'll I'll hand it off to you now thank you so much very stoked to be here um I'm Ria I am the COO at Delta it's a new type of distributed system uh and we've been thinking a lot recently about use cases that are powered by stable coins especially as it relates to payments um the next generation of financial services neobanks etc etc um so I'm very excited to be here and talking to anaka Anica do you want to do a quick intro sure yes uh can you hear me is this thing on yeah awesome uh I'm anakah I lead the Eco foundation and Eco is a project focused on stable coins and stable coin user experience in the ethereum ecosystem and Beyond so very excited to talk all things stable coins there's been a lot of really interesting discourse recently on the topic and yeah excited to dive in amazing so maybe I can start off by like setting the stage a little bit about uh some of the recent news happening in the stable coin landscape and uh some metrics so I think ever since stripe announced the acquisition of bridge um a lot of focus has been paid to stable coins especially outside of the crypto space um a lot of fintechs are thinking about it a lot of banks are thinking about it I think just yesterday the uh CEO of Bank of America was like we are developing our stable coin strategy which is insane to think that this is happening I wouldn't have thought that that would have been the case like 12 months ago um and a lot of activity related to stable coins is actually still happening on ethereum that's right um so I think about so there's about $210 billion in stable coin Supply outstanding and about half of that is on ethereum which is pretty insane and then another 10 billion is on uh eth l2s like base optimism arbitrum um and it's interesting I was like looking into the data and the number of active addresses on ethereum is 2.2 million but the supply is huge so that kind of indicates that the addresses holding stable coins on eth are holding like large values of stable coins are St coins on E whereas on l2s it's like a lower transaction size um so okay so that's kind of like setting the stage of where stable coins are today I'd love to kind of kick it to you to start talking about what you think some of the unique use cases are uh that stable coins are being used for today yeah that's a great question and you know stable coins I think have evolved so much from their Inception you know we had the first stable coin tether I believe was launched in like 2014 so this has been a long time coming and uh it's really was kind of like the 2021 2022 bull market whereby stable coins kind of had their initial surgence of market cap and then they've just been kind of going up steadily from there but if we look at stable coin usage today I would put it broadly speaking into three buckets the first being just like doing things on chain whether that's trading meme coins accessing yield via Defi and kind of stuff that those of us who are deeply crypto native kind of you know know and love but that is kind of foreign to the outside world generally speaking and then the other two use cases that I see um you know at pretty big scale today uh are both ones that exist kind of outside of the North American bubble um and so I think that's kind of important to note one is just crossb payments you know the ability to send US Dollars internationally across borders is much cheaper and faster than stable coin in stable coins than it is in the traditional banking system and many people uh mostly you know xus are starting to realize that um and then the other use case is just access to the US dollar for people who are living in other economies and not necessarily sending it overseas but just having access to uh the US dollar as an asset you know the US dollar is one of the greatest exports that America has ever ever had and one of the highest kind of demand products uh that has phenomenal product Market fit worldwide and so for people in other economies like Argentina for example who have had you know massive inflation over the last several years if they have been able to hold in state stable coins rather than hold in the traditional banking system in the Argentinian Pesos their purchasing power is far greater than that of their peers and that's another use case where we've seen just tremendous um you know acceptance and and Outreach in the last several years yeah I totally agree with that I think those are some of the use cases that I'm most excited about and I want to share a couple of examples um especially as it relates to that last category so when I was I was an investor at Castle Island Ventures um and we have done a lot of work in the St stable coin space and one of the first companies that we invested in when I joined was yellow card um and when when yellow card started off it was trying to be like a Pan African exchange giving people to people in African countries access to bitcoin and eth and then you know as with a lot of startups you kind of just notice how are people using our application how are people using our platform and people really just started using yellow card to facilitate transactions across borders in continent using stable coins specifically USD on Tron which was really interesting to see at the time um and then that part of the business has just taken off and then now they are making it easy for businesses to send and accept stable coins that's actually another use case that I'm really excited about is like business adoption totally of stable coin payments um we were actually on a panel yesterday talking about some similar topics and one of the examples that I shared that uh strip back actually shared in their annual letter today was around Space X which accepts stable coins um for starlink purchases in countries like Argentina Nigeria um and other markets where the local currency is pretty volatile um to reduce their FX exposure and you know they'll start there and then they might even Global businesses are starting to hold balances in stable coins to manage this FX exposure and risk and make it easy to like send money within the business or to suppliers potentially um so it's really like spanning the spectrum of stakeholders now which is awesome to see yeah that's true and another thing we talk about a lot in the stable coin world is like on ramping and off- ramping and solving that being critical to getting more users on chain um but ultimately as you suggest with you know SpaceX accepting usdc for starlink I think ultimately we're going to need to have more and more businesses accepting payments on chain and actually finding ways to use their money in the real world like you don't pay your rent or your groceries and stable coins today but once the world starts to move more and more in that direction then kind of optimizing for the frequent on andof ramping experience actually becomes less and less important uh because much of your economic activity will just end up happening on chain we're definitely far away from that but that's the way I see the world going I think on and off ramps you know there's a lot of a lot of providers a lot of competition in the space and they will continue to incrementally improve but for stable coins to really take off at scale from like a you know peer-to-peer payments perspective I think that type of thing will need to will need to you know come to fruition 100% one thing I'm excited about and I hope to see this year is more stable coin linked cards where you can just use the card at a point of sale and like spend your stable coin at a merchant and then hopefully the merchant um well actually maybe we can spend a couple minutes talking about the benefits of stable coins for merchants because this is something that we were talking about at breakfast today um you know I think it there's a lot of value for of stable coins to people in Emerging Markets it's clear um but one thing that I think is less talked about um and just maybe more so now with like the stripe Bridge acquisition but is the benefits that it offers to Merchants do you want to talk about that a little bit sure yeah I mean I think you know we actually have developed a stable coin wallet that we've kind of taken out to Merchants and sort of had some of these like boots on the ground conversations um and you know one benefit that certainly appeals is lack of interchange that they need to pay right because stable coins are effectively you know a dollar likee product as opposed to an instrument like a credit card where they're paying you know three or 4% uh and so that certainly is you know compelling to them um there is a question of though for the end user if you're not offering you know rewards on a credit card you know is there a big enough benefit to the end user so there's kind of like you need to think about both the merchant Dynamic and also sort of the end user and how you get both sides on board um I think it's all just an incentives problem all the way down that we're going to end up solving but I think there's going to be be a lot of experimentation in that respect um over the coming years for merchants and consumers and like finding that balance 100% okay so the title of the panel is our stable coins even real crypto so I want to spend some time talking about that um a little bit spicier yeah exactly maybe let's like set the stage a little bit on this do you want to talk about what you think real crypto even means yeah and so me sort of the the original inspiration for like this panel and this talk was driven by about a month or two ago there was a lot of discourse on crypto Twitter you may remember the meme of like the businessman in the uh in the Patagonia vest and with his coffee um and people kind of kind of joking around like okay stable coins aren't actually getting us towards you know this decentralized vision of a new Financial system that we're all after um and I thought that discourse was really interesting um and as someone who considers myself you know definitely an ethereum broadly speaking and someone who wants to build towards that initial Vision that was laid out I very strongly believe that stable coin are a necessary interim step to meet the world where they are today and bring them on chain and be able to from there you know do a bunch of really interesting Innovation from a currency standpoint that will ultimately take place over the next you know 5 10 plus years but I really believe that stable coins even though they are bringing the existing Financial system on chain are just fundamentally necessary for us to get to that future um that is much more you know perhaps Innovative and and just different than what we actually have today 100% And if you think about like some of the benefits that stable coins offer I feel like they're very aligned with the ethos of crypto that's right and when we just talked about some of the use cases that are happening you know Financial inclusion and access you know to things like the US dollar for people that perhaps don't otherwise have access that is already playing out in a big way with stable coins and you know has not necessarily played out with with other assets in quite the same way yeah it's just not possible and you know if you think about blockchains like they are permissionless right so you should be able to do whatever you want on these chains and you know I think it's exciting that institutions um are using permissionless blockchain rails to put uh traditional assets and give access and exposure to parts of the world that typically didn't have access to these assets um both financial and monetary um as it relates to like I think another property that is under discussed is the transparency I think that's a huge value proposition of permissionless blockchains and by virtue of putting dollars on chain you add transparency in a way that didn't exist in traditional payments before um one example of this I was talking to a company called koala pay and they uh basically help humanitarian Aid programs uh move value to Parts you know of the world that and recipients and parts of the world that need access to humanitarian Aid and one of the kind of things that they talk about that these programs look for is how do I create more transparency in this whole process and system and like stable coins are an amazing use case for that or an amazing way to kind of solve that transparency problem yeah I think that's totally right and that's very in line with like you know the ethos of crypto even if it's an asset that is coming from the traditional Financial system yeah another thing that I'm curious to touch on a little bit with you is the idea of diversity of different stable coins right as most of us who are stable coin users here in the room know the stable coin Market at this point from an issuance perspective is dominated by two players that account for over 90% of stable coin Supply and in the ethereum ecosystem we talk a lot about client diversity right with respect to not having too heavy Reliance on you know one party or one entity to kind of you know maintain things and keep things going is that a thing that you worry about when you think about the future of stable coins that in ethereum but also in all the other chains we kind of have this Reliance on two players at this point do you expect that to change how do you expect this to evolve how do you think about this uh cuz it's something that's been on my mind a lot lately yeah totally I mean I think that also is one of the main reasons maybe why people have this question about like are stable coins real crypto because you think about Circle and tether and they're decentralized entities that have so much power um and it's really tough to you know launch a stable coin and get distribution like it's amazing that PayPal has entered the space with py USD um um but you know if you look at the market cap of PUSD it's still like a fraction of what it is for Circle and tether and PayPal has huge distribution now I think that's going to change especially as they like continue to integrate it into their products um but I definitely think there needs to be like newer models introduced that kind of reduce the Reliance on a single entity one model that I'm pretty excited about and we were talking about this as well is the global dollar Network um where it's kind of a Consortium so even though there are centralized entities involved it's it's more distributed than what exists today so you know the the entities in this network include like Robin Hood Anchorage Kraken uh paxos obv obviously which is doing like the issuance and management of the global dollar um and they're pretty open to Bringing on new participants into the network to like manage it another model that I'm pretty excited about is the one that um m0 is working on where the base asset is called M and then you can wrap M to create branded stable coins um but they're trying to make like the M Network as kind of distributed as they can and potentially introduce some kind of like decentralized government governance um the founder used to be at Makow so I think some of his ideas and thesis developed from there yeah that's really interesting I think you know if we envision this future that plays out that is a more multi-stable coin world that than perhaps we have right now um we also live currently just to kind of set the stage in an ethereum environment that is highly fragmented you know we've solved the scaling problem but we've largely solved it with a prolifer proliferation of layer twos you know of which the long tail is increasing day by day um and so we do even already today have a real user experience problem whereby if you're trying to if I'm trying to send you usdt on bass and I have usdc on optimism that is not easy to do it's a swap and it's a it's a bunch of approvals in your metamask wallet what have you it's just like a bit of a mess for what it's worth this is there's many folks working on this including us at Eco uh in terms of interoperability and trying to make you know oneclick sends regardless of what asset you're holding and regardless of what you're what chain you're on much simpler but I think there's still a long way for us to go just with respect to ethereum and how it has scaled uh and as we think about the sort of you know the permutations and complexity that comes with many many stable coins on many many chains uh We've created a bit of a monster that that we've got some work to do yeah totally I know we have a few seconds left here but one thing I'm curious to maybe end the conversation with is today I think 99% of stable coin Supply is USD Den denominated um do you think that's going to change in the short term no in the long term yes yeah uh I'm Canadian I live in Canada and I actually can't see a world in the next like couple years where I want to or need to use a Canadian dollar stable coin our existing systems like you know our venmo equivalents for example are like pretty good in country uh and so perhaps I'm using stable coin probably US dollar denominated for crossborder appointments uh and using stable coins in the way that I do today but as a citizen of another country I actually don't feel a need for like in country stable coins so I think that we will get there over time in a decade I would imagine that Canadian vintex are building on crypto rails using a Canadian dollar stable coin because it's programable money it's faster it's cheaper all of the benefits that we have and are working towards but I don't think it's imminent yeah I agree I think eventually there's a huge opportunity to improve FX markets as well and like bring on like G7 currencies and just make FX markets more efficient but yeah we're a long way away from that um I think that's all we have time for thanks so much awesome thanks everyone thanks r [Applause]