ETHWarsaw 2023: Francisco Pinto, Request Network - Crafting Tomorrow's Finance

and uh let's give a warm welcome to Francisco for the next talk on Crafting tomorrow's Finance hello everyone so crafting tomorrow's Finance so powerful right and if you in in this room you're being part of it how you are using the blockchain you're building on top of the blockchain you're powering the actual blockchain the blockchain brings a lot of possible improvements to The Current financial system that we have it brings the possibility to give 1.54 billion people that that are now a bank a bank in their pocket it gives the possibility to increase transparency in a centralized system controlled only by a few and last but not the least it gives the possib possibility to make the system more efficient the thing about possibilities is that they don't naturally come true right for a POS possibility to become a reality they need to have some incentive behind it and that's exactly why I want to point out the last Point again The Current financial system it is inefficient and if we bring the right tools for it uh for it to be more efficient on chain will be creating the incentive for the movement to happen and by having that Financial system on chain on top of an actual blockchain will be making the financial system more inclusive for the End Bank and more transparent for the end user just by using block blockchain's nature and that's that's what request network has been doing for the past 6 years we are building the protocol the tools necessary to make that change happen we create the incentive to make the change from the to change the financial system from on offchain to onchain to push it forward but I've talked a lot about inefficiency in the very general sense so let's get dive in into what kinds of inefficiencies that I'm I'm I'm talking about in the financial system we all here know the problems about payments right payments uh the problems of payments have been part of 90% of the white papers and 100% of the first talks you had about Bitcoin but still transfers do take one working day between different banks in in the same country Global remittances still have an average of 6.25% fee and cross crossborder payments still take up to 5 days and the inefficiency I want to mention here is the amount of intermediaries and a remittance as on average four intermediaries and that's what drives the cost up and delays the whole process but moving more into the company side companies still suffer a lot from companies are the main uh uh the suffer the worst actually from The Current financial system especially smaller companies starting by invoicing invoicing bur burdens are a hell for medium-sized companies uh having to um doing the remittance between the payment and the invoice and tracking down unpaid invoices is a process that it's very manual still and costs in average $16 per invoice for a medium-sized company that's combined with the manual process causing a lot of mistakes causes a lot of delays in invoicing payments and every year because of those delays thousands and thousands of small and medium compan companies go bankrupt waiting for their invoices to be paid accounting accounting is like the backbone of in Integrity of our financial system right but it's filled with bureaucracy costly compliance and costly audits 42% of all the the money spent into accounting and auditing is just for compliance companies registered in the sa spent 18.7 billion dollar in audits in 2021 and this is money that's it's it's for operational work is to keep the system it's not for value added activities and despite all the money that you put in there you are not going to solve the problem because the problem it's it can't be solved by money you need to change the actual foundations and you can see it because despite all the efforts and all the money thrown at it 41% of the public companies commit accounting violations in a every average year also in an average year 10% of the public companies commit uh Securities fraud and I know it's easy to understand how blockchain can solve especially the payments part right blockchain is famous for cutting down intermediaries but the invoicing and accounting part are a little bit harder to grasp and that's where request Network comes in to comp to complement the the actual blockchain into solving some of these problems request network uh at its foundation is an infrastructure for you to add data to your blockchain transactions this data is normally added in the form of invoices so you basically can get an invoice for every transaction that you get and you do this invoice is connected to the payment itself so it updates uh depending on the payment uh you can pay it on on partial payments it's it's very uh adjustable and the data of the invoice and the payment get stored in request protocol that you can see there as a kind of a ledger the thing about request Network for for context is that it gives a lot of context to businesses working on top of chain it allows you to move a transaction to to go check a transaction that you made in the past that now noways looks like this into looking like this which is which is a lot more data and can help uh especially tracking down your invoices and your accounts and it actually solves a lot of the invoicing burdens because having the payment connected to the to the invoice automatically does the reconciliation of that invoice and anday paid invoices are very easy to track but we are not a pay payment application and we are trying to get to create and enable two major updates to the system that we have now on uh on a regular blockchain and the first one that I want to mention is on chain reputation if you start dealing your payments and invoices through request Network you start getting your financial data on your own ownership on an immutable and decentralized Ledger and by doing that you start you can you enable the possibility of creating a reputation for yourself and or for your company and the possibility to share that reputation with other entities so in the case of the small companies that I previously mentioned that go go bankrupt waiting for invoices before accepting um before accepting a deal with the company they can ask for this reputation for the other company and see if they actually pay on time and pay at all before wasting all all their efforts in a deal that's going to be paid late and it's going to bring them to bankruptcy it brings also a lot of different other possibilities if you think about it when you want to get a loan when you go to a bank nowadays to get a loan they ask you a lot of things right you have to provide uh your gains statements so your assets your credit history and to enable that on top of web 3s if you want if you really want to have the financial TP system on top of web 3 to make it more decentralized and inclusive for all those reasons we need to have some kind of reputational layer here where you can share that data and you can have an actual uncollateralized loan here on top of the chain let's but it's not the same as web 3 we are not trying to copy what's been done in web in web 2 actually in web 3 things are way more promotes way more equality for these kinds of services and way more opportunities to everybody let's take the the case of invoice factoring we do have some builders on top of request working on this case so I'm kind of familiar with it invoice factoring is a two trillion Market in web to but for some reason also it it um of course it's uh about the the volume of invoice and the the type of risk only big companies can really access invoice invoice factoring uh if we bring it to web 3 we stop being dependent from the big investors that are the ones that offer the the the invoice factoring products we can create a decentralized product that can offer invoice factoring to from from Li to get liquid from retail investors or smaller investment firms and we can start promoting those use cases and helping smaller companies and medium companies that want to get access uh to liquidity because of the flaws in their cash flows the other major thing that request is enabling is the triple entry accounting I don't know if you're familiar with it but triple entry accounting picks up the double entry accounting that we use nowadays and adds it a cryptographic proof in an shared and immutable ledger so let's let's take a look at that example Lis company makes a some kind of deal with Bob's company there's a transaction between them and in the double entry accounting system that transaction is registered only in their own books so as Alice makes the registry in his in her books and Bob does in his books but errors can happen right books are are are cooked and and triple entry accounting having us a um a ledger Shar immutable Ledger in the middle solves that so I'm I'm not saying that it will completely end all the in inefficiencies but triple entry accounting does have does give the possibility to have immutable records of your financials which which can can really end like 90% of the fraud because now now if you want to if you want to commit fraud you can change your records if you make it immutable it's it's really really hard it also promot promotes um enables real-time verification of uh the transactions you don't have to have pending times or waiting periods to get to someone's accounts and lastly it can bring a lot of automation of the things that today consume all those funds and and all all that time things like automatic audits automatic tax reporting financial statements in in the by clicking a button this is the future of Finance we just need uh and request network is trying to uh push it forward but we need people coming with us and Builders uh on top of our ecosystem so basic basically this is just a small scheme of what we think the request Network request Network ecosystem will look like in the future but in order to enable that let me give a small um update here about also uh a small give AIT a bit more context about request so request is a nonprofit Foundation we do create we have created infrastructure but we don't we are not creating products for the end user we don't want to actually create products so we are onboarding a lot of Builders to come build project uh projects using our infrastructure creating this future that we imagine because we don't want to be competing with the other actual businesses on top and we want to stay a nonprofit um on your left side you can see that I'm I've put in here the accounting invoicing and payment apps because those are the ones that will initiate the movement so if you start collecting data of course this data is on the users ownership but through but made through request Network we never get access to that data you can then start creating different products uh on top of that data that will facilitate State the financials overall on on on top of the blockchain to our Builders we can we we have some we what we can provide to them is our infrastructure which is uh almost free we do have a maintenance fee for writing the data um on the on the on the protocol and we have facilitated the payment infrastructure and invoicing infrastructure for them to use with a lot of different tools we we support integrated swaps in the payments so if you if you want to settle an invoice in Fiat but you want to pay in in ethereum and the other guy wants to receive an uh link he can we support escrow and streaming payments through super through super fluid and we allow you to be able to pay just just by clicking a button and batching different transactions into one we support all EVMS pretty much all EVMS and near and we are a bulletproof we are we have been bulletproof for 6 years and um with $400 million in volume we also have the grant a grants program for Builders on top of fre Quest and we provide Technical and marketing support and introduction to other to some of our Builders if you think you want to create some kind of synergy so what's missing to make this happen it's missing it's missing you it's missing Builders it's missing adoption we do are having a lot of adoption but we if we want to make it to the to to move the whole financial system and we need to all all start building uh together my name is Francis pint I'm the protocol lead at request Network thank you okay there any questions from the audience not all at the same time yes yes here we go thanks for the talk um the reputation score looks uh really interesting I was wondering how do we solve um this one against the possible fraudulent claims where somebody makes a claim for a payment which is invalid and does this affect the score in the end uh um so that's a good question uh we do uh facilitate the the the possibility for you to for the the receiver of the request to approve it and we only start counting the score after that is approved so if you get spammed with with invoices that you are not that you have not approved yet uh it it you can remove it from the credit score it's not going to affect your credit score so if you're but so if it only affects your credit score so we are not the ones building it it's one of our Builders that's act actually building it but on the protocol we do support that we we do have this approval of the invoice that allows you to approve only the invoices that you are going to pay and then if they are approved and you miss the date it can hurt your your reputation but if not if it's not approved it's it can't do anything makes sense thanks sure okay in that case thank you thank you thank thank you everyone