UX, Security and Building User Trust in Stablecoin Payments - Panel

Hello everyone. Hope you are enjoying stable summit so far. Uh this next panel is about UX security and building user trust in stable coin payments. We've seen a huge rise when it comes to the stable coin adoption. I think last time I checked a few days ago the market was at 297 uh billion.

uh but on this panel we will focus on some of the challenges uh in the stable coin adoption and most importantly how we overcome those challenges. Maybe before we start we do a short uh round of intros and also what you what you're building. Tell us a bit what you're building. I'm maybe going to start with myself. So my name is Bianca Buzz.

I'm head of deell at Chronicle uh the Oracle for tokenized um assets. Chronicle has been around since 2017. In 2023, it spun out of Maker and uh today, as Nick was mentioning um earlier, it powers um around 19 billions in um assets across DeFi and tokenized assets. Maybe Julian, do you want to go next?

Sure. Um, hi, my name is Jill. I'm the chief operating officer at Symbiotic. Uh we've built an economic coordination layer to secure um really thing that requires trust on chain to provide the building blocks for economic security um through through staking and uh security.

Hey guys, um can you hear me? Uh my name is Ron Barat. I'm not Ido. [laughter] Ido couldn't come. He's uh he's had an emergency uh personal emergency so he couldn't make it.

Um I'm a solutions engineer at Blockade. Uh what Blockade does is a security solution for uh basically anything web 3. We do um you know things such as uh supporting end users through the wallets, monitoring of protocols, smart contracts, um fraud prevention and um uh as well as operational security. So things like uh co-signers uh additional offerings.

Hey everybody. Hey everybody. My name is Bryce Ferguson. I'm co-founder and CEO of Turnkey, which is a low-level wallet infrastructure company that works with folks like Bridge, Poly Market, Moonshot, Axiom, Alchemy, a whole bunch of other folks within the industry. Um, we power different key management flows behind the scenes, whether that's businesses managing their own stable coin flows or enduser wallets where users um, you know, use simple web two style authentication to access a stablecoin wallet.

Hey everyone. Hey everyone. I'm Yugo. I work at Imunifi. You may know us from the bug bounty world.

Um but these days we are um end to end onchain security platform doing everything from monitoring and operational security to formal verification and um firewall. And we do this with a bunch of partners on the security space because yeah, security can't be a one one man's game.

Love it. Thank you so much. Maybe we start with uh an overview of the current UX of uh stable coins. Uh what would you say um a card level experience would look like when it comes to stable coins? go in many ways.

We're just going to share uh in in many ways I think we're there actually. You look at some of the stable coin neo banks that are popping up and some of the experiences around stable coins. And if you look at it from a user perspective, it's really really easy. You you can use a normal card through someone like Rain. um you can lend that out to a or Morpho and earn 8 or 9%.

Um all these things are are really in place. I think what we're missing is some of the connective tissue between traditional fiat. I mean on-ramps are still tough. Some of the um ability to interoperate with other financial platforms is hard. Stable coins are a little bit an island of their own.

Um but a lot of the UX has been solved over the last couple years. But I think trying these apps, it's it's pretty amazing.

I'll just compliment that in addition to like the friction and the ease of use, the major issue is security. It's like people feel afraid and stable coins seem stable but in front of us we have the presentation from the next speaker and he jokingly jokingly calls this the unstable summit in Buenosirus and and that's [clears throat] what people feel because a credit card like the major value of it is is fraud prevention or if someone wrecks you like you trust that the credit card company is going to make you wall or is going to make you all in in a world where server coin payments are are yeah dominant. But then the question that I would also like to to think about is whether stable coin payments being dominant whether that's like desirable for us or not. Um I would also just add that I think there's still like we've we have come a long way and also saying this um as a business that operates almost entirely on stable coins like there's still a lot to be done with respect to account abstraction and making it like even more seamless still like relatively easy especially compared to like traditional banking. Um, but I I think the big unlock is going to come also with like just easier access to credit.

Um, most even like uh crypto credit cards are still not actually credit cards. They're just cards. So, I think that's um that's a really exciting thing that's being built.

Yeah. I guess um one last thing to add here is uh security is important like uh Yugo said and I think it security builds trust, right? Um the problem we have in this space today is is lack of trust from from end users. Um so so securing all of the different steps of uh from from from the very uh you know first step of uh issuing a stable coin and then uh implementing all of the different use cases uh is critical because once things are secure trust will uh increase and then the users will come. So if you build it, they will come.

What would you say? Maybe uh building on that, uh what would you say stable coins must do better than solutions like Visa or Mastercard for them to become the default choice and not just an alternative?

Um yeah, so maybe I'll take it because I was left. Um, so the stuff they need to do better, well, there's many different things. I'm I'm going to speak about the the, you know, the area I'm I'm most familiar with, which is security. Um, and it it it comes down to making sure that every different step of the process is monitored. uh and you have uh the the right actions in place when something happens.

So for example, you want to make sure that if [snorts] uh you know by any chance uh you have a uh $300 trillion mint by mistake. uh that you're aware of it immediately and that you can take an action immediately to to to make sure that your end users will continue to use your stable coin. Um and and similarly uh you want to make sure if if [clears throat] you're a protocol that's using stable coins, you want to monitor the uh the different aspects of those stable coins that that you're using. Um and have the ability to uh maybe reverse a position if there's a deep event. Um so all those things are are critical I think to increase uh trust like I said.

Um I can I yeah I'll add to that. Um was the question was how can we do it better than it than is already Yeah. Um I think we have a huge opportunity to build it better by um resolving a lot of the trust issues inherent in like the modern payment system. And specifically if you even look at like credit cards and how um how much friction is involved with um fraud and and detecting fraud and um chargebacks and like that that whole part is so such a big cost center for the for the card issuers but then also such a pain point for the users. And um we can kind of deal with those issues through um solutions like economic security through yes like security and like having like secure systems but we can also deploy like the the basic ethos and premise of blockchain which is um you know eliminating the need for trust because you have incentives and economic security and so that's something that I think is a really cool opportunity for us to collapse the friction that pre-exists um in payments and just uh create something entirely new uh much more seamless and uh automated.

I think another piece here is um we're often talking about how does uh crypto replace our our normal credit cards and day-to-day western financial services, but in reality those work really really well. like my Visa is great and I can go and use that at a lot of different places and it is super low friction for me and I get my rewards points and all that is really really nice. Um I think a more interesting question is where are stable coins going to open up innovation in really 10x ways use cases that we haven't imagined at all yet. Um one of the things that we talk about a lot at turnkey is what does money look like when it is truly streaming in real time? you have agentto agent um co commerce happening in a real way.

You have um new kind of like uses with DeFi plugging in to that that broader ecosystem. I think that's where things start to get much more interesting on the stable coin side and it ties into a lot of the things that people have been saying here about security. I think the needs for guard rails in that world where money is streaming and not just being sent in chunky transactions is really different and the way that we have to look at that is quite different over time as well. And building on this and something Julian said on on the previous intervention, I think that like there are two angles to payments even in in this panel like one is the retail payments and the other will be um payments as as transactions especially in in a business context and and for for stable coins to to win like first and foremost we should and notwithstanding how great or convenient it is to use Vis and Mastercard and they earn their 1% or whatever fees for having built this infrastructure in a world that was very much not digital and creating this ability for people to travel and easily pay. But still now that's beyond they have become just dinosaurs and and are rent seeking and and and the promise of crypto is to to make the world more efficient and and cutting into those um old fat cats.

And so if not Circle or Tether, other decentralized or centralized players should really have the ambition to destroy Visa and Mastercard and create better uh networks for payments in the world. If we want stable coin payments to make sense and to be something that that we uh want to use and then of course with all the issues to be solved on on the on the on the security side and whatnot but then on the payment side as well sorry on the transaction side as well I think that's even more interesting because again payments have been solved and so it will be difficult to destroy Vis and Mastercard but on on the on the on the business world it will be very much easier to perhaps destroy some of the control of financial institutions in making business less friction um having less friction. For example, you could have stable coin payments working with um or like stablecoin companies offering factoring services to to their businesses and and creating a whole new uh tech stack on top of businessto business payments that will make everyone's lives easier from invoicing automation purposes. But even that because that's a software but on on the on the automation side of the payments and I think that's where the opportunity lies to make something like really interesting on on this space.

We touched briefly on guard guard rails earlier but I think this is a very important topic and I would like maybe to go a bit deeper. Uh what role uh do you think features like watch hours, circuit breakers, uh spending limits um play in this uh ecosystem but without making it uh feel too restricted or too complex uh to users or maybe there is a way to abstract these guard rails. What's your what's your take on that?

I'll kick us off on this one. Um, so I I think it's going to be different depending on the application, and that's maybe a copout answer, but the controls that a business that is sending billions of dollars through Crypto Pipes needs are going to be very different from a consumer buying their coffee at their local coffee shop. Um, with that I I think folks just need very very flexible building blocks for how they can establish policies, how how they can have controls in place and make sure that that is able to serve this wide variety of use cases cuz part of it is we we actually don't know we don't know all of the ways that people are going to want to put controls in place. Um my gut is for most consumer use cases not giving exposure to these controls is going to be more important. For business use cases giving deep control over these with smart uh defaults is going to be the path forward.

Um yeah, I think like the role of watchtowers is just one of several tools to enable things to be challenged and for there to be implications there and like all of the the the infrastructure exists for that to be enforced and it's it's critical. It's extremely important to be able to have all of these um measures in place and um we can deploy them through um like for example watchtower is not the exact same thing as an oracle but somewhat similar and um with symbiotic we're actually securing uh several oracles through of the CCIP oracles with some of the networks that uh they work with and we're seeing a lot of interest in that kind of usage for for staking and for slashing because it just makes a lot of sense to have um not just networks secured by by economic security but but also oracles and this idea of um you know actors behaving in a certain way and if they don't act in the way that they're supposed to there being some sort of implications there and yeah so I think that that's critical I agree with that uh abstracting that layer and having these processes is uh automated based on actual onchain data. Maybe um same same same same direction of the question still protecting uh users but um looking at it from the point of view of expectations of users given that for so many years we've been uh living in a [clears throat] world where users expect uh chargeback fraud protection um and really clear recovery paths uh from traditional uh finance. How do we educate them? how do we mold their mind if you want for um the onchain economy?

Um so I think I think it's uh it's going back to what I said already but I I think it's u important to emphasize and maybe expand a bit. It's all about trust, right? Uh if users feel like this is going to work for them, they're not going to lose their funds. uh there there's no risks. They're not going to hear about any big uh you know Luna incidents um or or or things of that sort.

That's I think the main the main thing that could uh bring new users into the space and start using stable coins more. And I think if you're building stable coins, um to to do that to to increase trust, you need to make sure that um that your stack is secure. Um that the critical functions are being monitored, that uh you know, you're you're minting, you're burning, you're pausing, you're freezing, all of the different roles. uh all those are monitored and you have you know clear actions including automatic actions that uh that can protect those functions those roles um and that will increase trust right it it will uh reduce substantially the number of incidents and uh and users will become you know more um uh not sure what word I'm looking for but [laughter] they they will uh they will start adopting more is what I'm trying to say. No.

Yeah, definitely. Um, on that end, I think it's also important to to just separate what will be the decentralized stable coins from from the centralized stable coins here. And like on the decentralized side, example, we at Unifi on the crowd sources security area. I've been working with a major project since since practically and we keep on boarding very new cool decentralized stable coins with like a really good approach to security. and even more recently one from from the itself, their their latest project, but also a bunch of of new smaller very cool projects such as such as Pinto for example, um offspring of of Beanstalk.

But then on on the other side like Circle and and Tether they have been on this yeah years long battle to gain regulatory legitimacy or or or or to improve their trust with the powers that be so that they can continue to to operate their businesses and they work with with some [clears throat] security partners. But then on the other end there's a lot of opacity in in what their policies are. And um so far users have been fine because there have been no major exploits in those like two market leaders. But like it's just thinking that the world will will be the same tomorrow. And whereas circle has um like a different um minting model with with with with a bunch of parties that is operating on on a on a single um minting a single owner minting model.

And so it may be the case that one day they get acted and and and everyone will be wrecked. Um and even though they they have other circuits in place, it's not great for user trust. They have that user trust because they have the Lindy effect behind them of being the first player and have been operating for so long. But um it will be interesting to see those centralized players adopt some of the practices that the rest of DeFi has been using if if stable coin payments are to be anything else than just kind of a fintech play with crypto in its name.

I really like actually that you brought up uh this difference between centralized stable coins and decentralized stable coins. Maybe we go a bit deeper and we look how do we actually build this uh resilient decentralized stable coins. What are some of the best practices?

Well, not doing what TEA did for sure. Um, but yeah, I think that's also a topic for a stable coin design conversation. But I think bringing into into just the UX security and and user trust here, I think just it's important to think of of stable coins as also these very complex systems and and security is not just about like smart contract security here. It's also mostly about economic security especially if we're talking about the the decentralized players as obviously. Um but then I think what matters then is is to ensure that like the users are finding a good experience and uh right now with stablecoin payments this only happens if there's a card attached to it and I don't think there's any stable coin decentralized stable coin issued with a card attached to it.

But it will be interesting to see if we get that new network competing with Visa and Mastercard um that's kind of cryptonative and how that can then integrate with with the rest of the world because then this brings us to another topic which is that new network if it's peer-to-peer for example maybe you wouldn't need to comply with all all the cumbersome um anti-inancial crime infrastructure that exists now on top of Visa and Mastercard and um that infra infrastructure exists for a good reason. But at the same time, it it also creates friction and so for the dream of the decentralized stable coins, it will be interesting to see if if such a project could come up. And in this case, a card can be just a virtual card, right? We don't care as much to use physical plastic or metal cards these days. It's more just about does it work with Google Pay or Apple Pay.

Um, no, just something that you mentioned as well, like if you have a decentralized stable coin or anything that's decentralized requires economic security. So, I would say that's an obvious best practice. Um, and something else that you actually brought this up before, um, Bryce, about the experience of people today that like their credit cards are are great and like why do we need something new? Like I think that is very true. Uh and it depends on what jurisdiction you live in, but definitely in North America, it's relatively easy to access a credit card and payments are really seamless.

Um but I'm starting I [clears throat] think people will realize soon, especially with all of these yield products coming on the market that are like really abstracted and really easy to access and like you don't know what stable coin you're holding because you don't really care. Like you just know that it's US dollar denominated yield. um that's like a huge disruptor to the traditional products that are available to people. And I I think it's it might not be people realizing like oh like my payment system sucks and like this is a better it could just be like oh I've been getting screwed by banks for so long I didn't even know that I could be earning yield on my dollars if I had like a foreign bank account. So sorry not really answering the centralization decentralization question.

I already addressed that, but I think that that's like a a huge unlock for the um [snorts] for the UX with um with stable coins like the the yield.

Yeah, I totally agree. It feels like that is where we're going to see mass migration to stable coins in the US and more developed markets. Um and again, it's not necessarily going to be the way that people are transacting day-to-day, but it's still huge. I mean like the the Coinbase product for earning yield is attracting so many people in the door because they're like, "Oh, there's a trusted brand behind this." A a just announced their A app that has a million dollar insurance on balances.

And it's starting to have that feeling of, hey, this can be a true savings account for me, which I I completely agree with what you're saying. Um [clears throat] we don't have uh much time left but uh I would like to wrap this with some forward uh looking questions. Uh which innovations whether those are uh technical or design driven do you think would make the biggest difference for mainstream credibility in the next few years? I think right just said the thing that was we were forgetting to talk about in this panel and I think it's it's kind of the holy grail which is the yield on your standard account and um there's been a bunch of innovation over the past months on that this week as well we we saw very interesting announcements coming up with a at least two days ago bringing something very interesting um to market also with a $1 million user funds insurance I was surprised because they call it insurance and I was thought they will just call it cover and and have some internal mechanism to cover in case of issues but they really called it insurance and that's a big deal. The legal documents were not in display yet they said they were going to release them upon the app release or something.

Um but like the combination of those two [clears throat] aspects like putting money to work for the user instead of for the bank on the one hand um even for for accounts that typically due to convenience uh reasons will not be benefiting from that and then on the other end also guaranteeing to the user up to very decent amounts like 1 million um is really a powerful combo and so I'm really looking forward to see this coming up from other players in the market. Yeah, maybe building on that, I I think the question of how do we bring more users on board, a lot of this is actually just the boring elbow grease of distribution and folks actually using the existing building blocks that have been built out over the last 5 years to bring really amazing products to market. And we've been seeing a ton of really interesting uh attempts at this and it's early days but I I think part of this is just like need to grind on that product, need to market it to folks, need to get distribution through existing fintech players and that's where a lot of the adoption is going to come from over the next couple years.

Yeah, I think all that is is is great and I think uh you know absolutely on point. Um, but to add to that, it's it's a question of uh ease of use and and simplicity for for new users, right? Users who who have never dealt with crypto, they there's a a knowledge gap and and it creates fear. So people, you know, I've never done that. How how do I do it?

So you need to to make it simple. You need on-ramp to be simple. You need to do things like what Bryce is doing with uh uh [clears throat] you know eliminating the the private key and just using web two uh level um interaction with with the with the wallet. All of those things are are super important. Uh without that it's going to be very hard.

Yeah, I would say account.

Yeah. Um the mo the more you can abstract away all of the underlying technology just the more this will be successful. Like people need to just use payments and they use whatever is fastest, cheapest, more most versatile. Like it doesn't really matter what's underneath. So I don't think we'll be calling them stable coins or mo like the majority of 99% that don't care about or know crypto.

Like they're not going to use stable coins. They're just going to use the payments option that works best for them. Um, and I think a big unlock to that in in addition to the account abstraction is

[snorts]

um just more products that are compatible with stable coins. So like FX markets like other currencies in um stable coin format. It's not as competitive of a market to build like you know a even like a euro denominated stable coin or a Canadian dollar denominated stable coin. But like if we want to actually completely disrupt the way that money moves around globally, you need those markets to exist. So I think that um those things are going to get built as soon as it's makes economic sense to do it.

We kept um mentioning um today a a few times a bill about building this uh trust and and reputation. So I think uh it would be maybe relevant to to touch this briefly. Do you see this uh will happen onchain, offchain or maybe in a hybrid way?

I think it's going to be hybrid and we're already seeing that like a for being one of the most decentralized protocols is bringing kind of centralized trust to this application with the insurance that they're they're putting in place. Um which drives a lot of a lot of confidence there. um insurance over time can be something that that's done on chain at scale, but I I think that is a bridge to cross from a communication perspective with uh consumers and them being more comfortable with a centralized party because that's what they've always known is I I think how we start to get people on boarded. Um, so feels feels very obvious that people are going to be tackling this from a couple different angles, but centralized maybe will be the the first big wave of folks and then decentralized will be the second big wave.

No, I I definitely agree and that example is also very interesting especially in light of another player outside of the stable coin world for now. Uh, and the recent move for unification of a bunch of entities in space. So, so on on the unis swap side and curiously Stani went on the governance forum and heavily criticized their their their argumentation

[clears throat]

um and he was arguing for the a model and how like their approach to decentralized um not corporate but the governance structure would will be sufficient then to assure the trust in the rest of the model. notwithstanding the fact that then the insurance uh component now is certainly centralized at least with information we have. Um and so it will be interesting to see how this fight plays out now given that um with Trump's administration recent moves we are seeing this trend away from decentralized models and and from the need for this sophisticated governance apparatus to justify uh surviving regulatory attacks especially in the United States and so there's clearly this fight going on on which will be the prevailing most sustainable model going forward And um for now that means I read is the answer but I'm looking forward to see the decentralized side winning this race at least on on the higher end more abstract um top level governance model.

Thank you for that. I think we might actually have uh time for one quick question from the audience if anyone has a burning questions for our panelists. I see there something No. Can we get a mic over there or just uh say the question and I'm going to repeat it here? Yeah, great question.

So to to repeat, what's the impact of nefarious activities in like stable coin adoption and how do these play out? Yeah, like nefarious activities are bad by definition. No one likes them. Crypto has these Yeah. kind of nuanced approach to to dealing with nefarious activities for for the good reasons that that group that defines nefarious can control other groups by changing the definition of nefarious.

Uh but let's put that question aside and just assume nefarious is bad for the sake of being bad. Um then I think what we're just seeing is due to the market opportunity that exists both in payments and businessto business transactions like the stable coin players both centralized and decentralized they want to to win market share and so they have to play by the rules that are dominant in in that area and and currently there's a big apparatus for for anti-moneyaundering and other financial crime prevention um mechanisms and so everyone is playing by those rules and um I think that's that's good. Now we just need to improve those rules because those rules haven't been designed for a world that can be made more efficient by by our technology.

Yeah, that's a great point. I think uh to to add to that um you know different protocols, wallets, uh exchanges need to have the right solutions in place also to protect against such use cases, right? So if you have AML or really any compliance, you need to be able to detect and block that. Um so that's that's a critical component as well.

Thank you so much. Unfortunately, we are at the top of the time. I would have loved to continue the conversation. Uh thank you to our panelists. Thank you to our audience and uh let's give our great panelist a round of applause.

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