Understanding Local Stablecoins (Tony Olendo)

GM GM everyone uh my name is Tony I'm from vifi Lab really excited to be here today is a really great day for me um uh been waiting to speak at stable Summit about this topic for quite some time and it's also pretty cool because coinbase sent money today has part of our Venture around so double celebration yeah sure so I'm here to talk about well what we do at vifi first of all my name is Tony orando um worked in D5 for about 5 years now um X polygon as well and we on a mission we're on a mission to bring Emerging Market currencies on chain through local stable coins and effects and the main topic I want to talk about today is decentralized effects right um so what so have we seen in the past year since we founded vifi is that latam and Africa have basically traded about 540 billion in stable coins so you could imagine that from a volume perspective um but then 70% of that is institutional volume and what do we mean by institutions we means companies are basically turning to local stable coins I mean to to uh crypto to be able to actually drive USD access but that also exposes them to quite a bit of risk but then also we've also seen that um Africa has emerged as the top destination for Defi and so the result of that is that we have to start to consider how are how are Emerging Market institutions going to come on chain and start to access USD stable coins now there's there's a there's a bit of a risk involved in this um this is this is a story about bitco and bitco is the largest um uh fast moving consumer good supplier in Africa um it has 50 products in 17 countries and they severely USD constrained and they got rugged about 900 K on a failed us on a failed us DT deal and this this basically underscores the fundamental problem we have here because moving from your local Fiat to a USD stable coin is a very nebulous and undefined category why simply because there's an existence of a of a parallel market now I'm a sneakerhead uh with my ugly duckling um Nike Air Maxes I could buy them from a Nike store directly or I could go on a secondary market and try to buy it um at at a at a uh that at a higher rate and this is always true um for for any resource constrained good and so imagine if that is actually true for your National currency where you have the official central bank rate and then you have the parallel market rate and the central bank rate is not is is not accessible to everybody and everybody severely constrained and then you have a variance that that that that actually emerges because you have the you you you actually have a official rate and you have a parallel market rate and so whenever you go to Costa Rica and you swipe your your uh your credit card you're actually getting the the the uh the uh the Government rate which is a lot lower um so if you're actually spending um on your vacations you're actually losing a lot of money because of that now the reality is that we have all all of these different spreads that actually kind of exist and you it's a a dirty little secret that all of us suffer with and so the reality is that off off ramps are really not the uh the uh the uh problem the the the fundamental problem is actually finding the best price and this is what would lead a a a blue chip company such as bedco to go and risk a usdt trade and actually get rugged because they cannot find a USD seller in time and the the actual the actual impact of this is that you actually find a lot of manufacturers in these jurisdictions operating at 50 at 50% capacity simply because they they actually cannot get USD in time to be able to match their supply chain needs and this is a fundamental problem that that uh continues to to actually plague a lot of Emerging Market manufacturers and businesses generally if uh uh we if uh if we actually had a local stable coin inside of Kenya you you would be able to serve a $25 billion importer Market you have e-commerce people who are trading at about 2.6 billion um where where where where uh there is there is USD demand that is actually dollar denominated inside of that particular jurisdiction but but now because of correspondent banking it makes it very expensive for them to be able to actually move USD if and out of a given jurisdiction you have the remittances market which is about four four 4 billion and these are plagued by prefunding agreements and then you have multinational corporations so how many of you know that starlink is using stable coins to actually trade inside of Emerging Markets starink has a very aggressive director consumer strategy and because of that they they need to be able to move funds and they're actually using stable coins to move to move to move funds out of Emerging Market currencies back back into you back into USD and us and usdt and so the main thing that we're actually looking at is we actually seeing the emergence of a lot of local stable coins but um you but the but they are they are all suffering from a fundamental problem and the fundamental problem is that they're not able to find enough liquidity because they're not designed for f and so if you're an Emerging Market issuer you need you you need a uh a uh a protocol that that actually provides liquidity for USD against your local stable coin and that is exactly what we're building so we are an onchain fx protocol that sols for liquidity and FX price actions for local stable coins and um why why uh why we believe that is fundamentally important is simply because we need a decentralized effect solution we cannot do centralized trustme bro's exchange rate like all of all of those Dynamics have have have to actually play out on chain in a way that that that that is actually reflective of supply and demand and so what what uh what what we are building is essentially a uh a FX protocol that is able to move liquidity from uh from a local stable coin into a USD perent and uh and vice versa but crucially facilitates LP as LP yield because amm are not well traditional amm as we know them and are not necessarily suited for FX trading because demand is always is has always um is always uh uh single single single single directional and so if you actually have a decentralized effect protocol then you you actually able to to actually incentivize LPS and solve all of the challenges that all of these local stable coins are actually facing and we have talked to local stable coin issuers in all of these countries and we know we know a lot of the challenges that they actually facing and we want to continue building that out um and we'll be launching soon but we we essentially combine TB yield and swap fees to actually give LPS incentives to provide liquidity for local stable coins that that that is what we're actually looking at and we've worked with a lot of Emerging Market um on and offr providers who combined up actually pushing about $250 million in monthly volume and actually solving problems for a lot of the businesses like uh like bitco so that's it thank you very much if you have any questions please reach out to me my co-founder is here as well Veron thanks