PayFi: How Solana is Building the Original Vision of Programmable Money - TOKEN2049 Singapore 2024

hi everyone uh my name is Lily I'm the president of salana foundation um I got into crypto when it was only Bitcoin back in 2013 and 2014 10 years later uh I still always remember some of the original things that brought me to bitcoin and into blockchain and one of the things that really uh got me excited about blockchain what Bitcoin could possibly do was this original vision of programmable money um so uh for me I got into this because of Bitcoin I'm part of the salana ecosystem Today part of the salana foundation uh but to me uh these are still parts of an overall kind of industry and a mission that we're all on um to uh broaden Financial access uh and really reinvent uh the internet of money all right so what is the original vision for blockchain well it's actually on the Bitcoin white paper uh the uh title of the Bitcoin white paper is a PTO pure electron electronic cash system it's not Bitcoin uh digital gold for the next Century or something like that right so what did Bitcoin sort of propose not just literally what's in the white paper but what was kind of the vision and why it becom significant well started off with a technical mechanism uh that allows uh algorithmic uh uh kind of protection of digital property rights through self- custody so this is uh an image of the original Bitcoin Genesis wallet and the reason why this becomes uh significant is with self- custody you can have digital property rights in an increasingly Digital World also what it means is that with the Advent in 2015 of smart contracts and what ethereum brought to the blockchain space then you could have programmable money and with programmable money uh kind of money Legos type of articulation uh you could start to start you could start building an open Financial system where anyone with an internet connection can access self- custody and therefore can tap into an open Financial system there go airgo everyone with a uh with an in connection has a bank account right uh we've probably all used these things in the past ether scan you've probably done a swap or done something in defi on chain uh and it's amazing it's transformative there's just a couple of things that actually do limit Financial access which is that on a really important day if you're going to swap it could cost you $800 that's uh and that's something that you can afford if you're a whale and trading a million dollars okay fine that that is what it is but if you are a regular person trying to use dii that's prohibitive uh and furthermore why this is important is because with self- custody being able to access an open Financial system uh what that now puts in the hands of basically anyone with an internet connection is access to economic sovereignty and economic sovereignty itself is important because economic sovereignty is the basis for greater forms of self- sovereignty and as so many things in this world have moved into the digital realm uh being able to actually own something in digitally native environment is critical and this is not something that you know only even came around with Bitcoin in 2008 uh if anyone's ever read this book book I consider this book to be really required reading in blockchain uh there's kind of like this 20page section is really a blueprint for Bitcoin and just to read you one of many Choice uh passages in there uh new technologies will allow the will allow the holders of wealth to bypass the national monopo of issued and regulated money in the modern period uh and uh the importance of controll the world's wealth would be transcended by mathematical algorithms that have no physical existence sound familiar right so uh all right so going back to kind of what the original Bitcoin story was and how this evolved over time uh about 10 years ago there was a lot of discourse a lot of open discourse over what exactly is Bitcoin which at the time was really analogous for really this entire concept of what blockchains were so there's a lot of discourses at store of value is it of medium exchange or is it really a technology platform and if you look back about 8 to 10 years there is a lot of discussion around around this and different parts of the industry the CT devs the app Builders the investors had different perspectives on this today we take it forgiv that what Bitcoin became was digital gold um that affected the robot meaning the idea that there should not really be a technology road map for Bitcoin because Bitcoin is not a technology platform okay uh it's doing great we all love Bitcoin uh but then the question is these two other things are also important and so who's doing something about this medium exchange technology platform in my mind everyone that came after Bitcoin including ethereum including salana including many many others are really focused on building out this Vision it's pretty different than trying to be digital gold and no one else gets to be digital gold okay so uh following the original kind of vision of Bitcoin now there were some early innovators on talking about blockchains for payments Bitcoin itself also talked about perhaps Bitcoin for payments uh but then the narrative around this has been well if you put payments on a blockchain it's better because value proposition is fats cheap and constant uh the issue that I have with this value proposition is I think it's not good enough I think that whenever you have new technologies those technologies have to enable new markets it's not just about taking the thing that you do today and putting it on a new platform in the same way that about 30 years ago when uh when you know web 1 came came about and we were all chatting with our friends on AIM a lot of folks thought you know over 90% of the folks thought that for sure Time Warner was going to own the internet because we're just going to take all of that content and we're going to take we're going to put the newspaper online because it's faster cheaper and constant right so we always have this narrative okay this new technology is going to make that other thing that we already do fast shap and constant but it never actually really works out like that because what technologies really are here to do is to reveal organize and monetize longtail markets so going back to the content example back on web 1 we're all using blogger and that was really the Advent of what was creating revealing this longtail market around content creators in cont content consumers which is all of us similarly Uber or grab here in Singapore uh there's always been a latent demand for drivers and Riders at any moment and with new technology meaning mobile phone you could actually start to reveal and monetize those markets uh so what do we learn from that how do we apply that towards Bitcoin blockchain and kind of the future of our industry um so in my mind to summarize new technologies have to be anchored and really sort of can gain adoption on 10x use cases fast cheap and content is good it's just not good enough all right so then the question has been well if this has been the vision of Bitcoin all along why haven't we gotten there 15 years later um well in my mind it's because you have to have three things in the same place at the same time performance again a lot of people like to talk about fast and cheap you know we'll uh you've probably seen this about salana before fast block times and then doing popular things like minting nfts also very performant Capital liquidity this is an important one you can have a really fast blockchain but if no one uses it then it's not useful so asset liquidity has over the years come into our industry largely in the form of stable coins because that is the money that people actually use for everyday life so medium exchange and then lastly developers one of the hardest things to build after the blockchain Network itself there are two ecosystems with critical mass of independent developer bases one is clearly evm the one that started at all the second is salana so three conditions you got to have all three of these things in the same place at the same time said more simply the chain itself has to be fast and sheap performant you got to have critical mass and money that people use and you've got to have independent developers and also importantly you cannot see this as a trilemma I know we've gotten used to the Nar that everything is a trilemma if you are only two out of these three which I think is the current state then you will never actually be able to build an onchain economy because you're forced to trade off performance and liquidity unification which doesn't work for financial products okay so what is payi isn't payi just defi uh well it's not because the way we talk about defi today it's a trade the core unit is I send in a token and I get another token back whereas when you're talking about payments and settlements the core transaction is you're you're sending in a token and you're get a getting a good or service back and that's a fundamentally different type of transaction uh and what it also means uh is that a settlement for a good or service inherently there's a production value behind that transaction which means that there's a time value of money with each one of these settlements okay so here I'm just going to share three examples of the types of things you could do that you can only do on blockchains uh and you know what's interesting about these is that the kind of core demand for these types of transactions already exists they just cannot exist in real time uh at the microtransaction value that you can potentially do on blockchain all right so One retail example first uh we've all heard of buy now pay later Clara affirm uh what you could do in blockchain is buy now pay never all right so how would that work well today Everyone likes to talk about paying for coffee with crypto you could buy buy a cup of coffee let's call that $5 and maybe the credit card company or someone in between goes and actually pays that $5 to the merchant instead of actually paying the $5 in cash or whatever it might be or $5 at the end of the month on your credit card bill you could take $50 and put it into a lend borrow for example Camino and the interest from that the yield from that could be streamed as a repayment on the $5 that of coffee that you just consumed now you could put in $50 until to lend borrow you could put in $5,000 and depending on how much you put in the interest level of course be different uh you'd pay it off sooner rather than later so this is one of the ways that composable Finance in crypto programmable money and composable finance become useful because it starts to collapse payments and savings and Investments a second example uh is so crypto or uh internet native producers creators typically sole Proprietors and uh if you spoke with a Creator they'd probably be thrilled to be able to finance a video today and let's say a million view videoos worth $10,000 over time they gladly take $9,000 a day Finance your next production but this is a type of credit Market that cannot exist today does not exist today for a number of different reasons uh partially because a Creator business is too small to uh to finance a single asset at that ass it's just it doesn't make sense and it's not economic right these are the types of economies and the types of credit markets that could potentially be created in a digitally native world where the asset the collateral payment and sort of the entire economic Loop can be done online the third APA are financing massive industry um IO supplier $100,000 that supplier might take 95,000 today rather than 100K in a month right uh to ease their own working capital requirements the thing is in order to access this Market you've probably got to be uh both in the United States in a in or or you know in a very well-developed economy have three years of audited financial statements have a great relationship with your banker and finance some critical mass of your business if you wanted to do if you don't fulfill all four of those requirements you basically don't have access to this market and this is something tons of supply and demand both on the capital side and also the business side so three examples um and here are some ways where this can actually be architected really using the tools we already use in crypto today Payment Processing payment processors typically fulfill three functions because it's sort of vertically integrated on this chart where you're you have the KY uh they manage the kyc they also manage the movement of funds let's say crossb minimum of three days so you've got to trust that they're actually using your Capital to bridge that transaction and they also manage pay and payout so if you could use some of the tools that we already are very mature in crypto today to uh to partial these out so they manage the kyc liquidity can be managed on chain which allows uh which potentially broadens uh uh liquidity to new sources of liquidity and it's also transparent because it is onchain uses all the stable coins that are critical mass today and then also you can use the blockchain to manage pay and payout addresses with stable coins then you can bring both creater transparency velocity and also really just utility to something as mundane and as sort of as frequently used as payment processing then you could extend this and the kind of the the on RAM kyc evalu maybe that person is a originating credit some of this is already happening online uh uh on chain in kind of various contexts but this is the way you can evolve from Payment Processing to credit origination models and increasingly sort of new forms of credit and onchain activity uh and this applies to really any anywhere within kind of value chain that you have time value of money which is all of these different kind of products that we already know use and exist throughout the world supply chain Finance payday loans credit cards crossb settlement interbank repo markets uh and I think these are all really right on uh right on the horizon for us as an industry and are uniquely possible on salana because this is the only environment where you've got performance and liquidity both in capital as well as Talent so that's what I want to share about payi um we're building this we had several thousand people uh apply to come to our payi Summit yesterday um had a full house and so this is uh uh come join the payi movement thanks so much