Ernesto Olmedo Pereira, Qivalis | Building an Institutional Stablecoin That DeFi Will Actually Use

Maybe a little bit of an introduction. Um, I'm head of strategy and DeFi at Kalis. I already mentioned we are a consortium of today 12 banks. We have about 200 million customers in total and we are an open consortium that will enable more and more banks to join. Um, I think by the time we go live sometime around end of summer, we will probably have a few more banks.

I cannot say which ones yet. But uh what we are building is something that is uh quite close to my heart uh which is the fact that the euro is invisible on chain. Um if you look at what's going on uh on defy protocols you see that the risk is completely uh you know concentrated on USD denominated assets. And of course that's a problem. If president President Trump suddenly decides that you know uh he's going to completely flip his op his his opinion uh also known as the taco trade then uh there is a big issue for protocols or for DeFi in general if you are depending so much on the policies of a very erratic country right so we think uh there is an opportunity out there for us to bring European values on chain uh what does that means uh we want to bring a stable coin which is uh open which is you know secure etc because We see that there is a big potential out there and uh we think uh our European currency simply cannot afford the the the risk of you know missing the train in this fast growing uh segment of the global finance in uh industry.

So uh why do we think that DeFi should care about us or about this effort that Europe is doing? The first uh problem that I mentioned is because of the dependency of D5 protocols on USD denominated assets. Um this single currency concentration is ridiculous from my point of view. 99 99% as I said uh I think uh it's not optional to manage that risk. It's an it's an imperative that we start giving alternatives uh so that you know protocols like lending protocols uh work more efficiently and perhaps with a little bit less risk.

Uh the other point is the regulatory tailwind that we are having in Europe. So up up till a few uh years uh I think uh the central bank was not really happy about seeing all these stable coins moving around. I think the conversation is starting to change now. Uh the Bundes Bank in Germany for example has openly said that they support the issuance of euro stable coins. Bank def France is also very uh you know uh forward thinking in their approach to to blockchain.

Um and we think that this is going to continue. Uh the Luxembourg government just yesterday issued an announcement that they fully support uh the development of a common European stable coin. So we think regulators and governments are already on board and they think it's important and necessary that the euro is present on DeFi. And this gap is also the opportunity. So what we think is uh once you know we are live uh we would really very much like to work together with builders so that they take this opportunity and build uh on over this uh gap in the market.

So it's important to also say we are not a bank we are a consortium which means Kales is set up as a completely independent company. Uh we are an eman institute uh in Amsterdam. We have completely independent management from the banks which means that gives us the liberty to decide okay for example we're going to issue significant liquidity at defy protocols we are going to work with builders we are going to support them for them to adopt the euro on their protocols uh as I said today we are 12 major banks more will be joining um we are working with them with those banks so that they understand for example that they could or should integrate uh defy offerings into what they already are building for crypto trading or for you know their wallet solutions because we think that's going to bring instant value for their customers. Um we target to go live by you know second half of this year uh depending on when the central bank in in the Netherlands gives us the license. Um and this is what we bring to the table.

First of all we bring institutional depth liquidity. So we are as I said a consortium of a few globally significant banks, a few major banks in Europe and so on and so forth. So we have access to very deep uh liquidity uh which I think is not something that we have seen in the euro space so far. I mean we have circle of course with their euro stable coin but even them in that case the liquidity they have is basically negligible compared to USD liquidity. So we are bringing uh euro uh liquidity on the table.

We are going to bring it to to um decentralized platforms like Ethereum. Uh we're going to bring it to permissionless protocols. I will not say which ones but you can probably think which ones are going to be. Uh we're going to issue liquidity not only against uh other fiat currencies but also against ETH against Bitcoin and so on and so forth. Uh because we think there's appetite out there to have an exposure to those assets but denominated in Euro.

Um this is an open architecture. As I said uh before in the panel, we do believe in open source. We do believe in uh you know collaborating. Uh we are not going out into the market and saying we're going to destroy all other stable coins because that's ridiculous. Uh we want to work with them.

We want to establish common liquidity pools for example with other European issuers. And we are also thinking about uh developing um tooling or infrastructure with uh D5 protocols uh together. Um some of the things we are uh looking at are for example uh centralized exchanges, decentralized exchanges, AMMs. Um there are a few things where we think we have we could probably have better solutions than what we have today. Uh we will start with the typical concentrated liquidity for capital efficiency on euro uh USD and euro pairs.

But we are also talking to some of these AMMs to see how can we integrate them with more institutional grade liquidity provision. So stuff like uh you know RFQS and so on so that uh these uh decentralized exchanges can also serve uh institutional u grade you know trans transactions um because we do believe that's going to come if you see what the banks are doing they're issuing tokenized money market funds and Ethereum so you probably are going to need some kind of trading infrastructure for such tokenized real world assets and you're probably also going to need some infrastructure that supports transactions of 100 million 200 million probably not going to work with uh you know the typical AMM pool. So that's something to work with the builders together. Then we have integrations with lending protocols. Here we are also thinking about okay so how can we bring uh more interesting uh treasury strategies on chain that banks could use uh so not something chasing the highest yield available.

So more about how can I bring a treasurer of a major corporate in Germany on chain to use one of these lending protocols for treasury optimization. Um optimizing these lending vaults together with the protocols uh and building these uh routing pools uh because we also think it's important to for people to have way to a way to move from the euro towards another fiat or from this fiat uh to us. We are working with consorcia in Japan, in Korea, in the US um because we think that's going to be an important uh part of this new economy to have onchain FX and uh we think uh DeFi is going to become the engine of this uh new uh let's say let's call it renaissance of the euro onchain. It's not an afterthought. We see this as the foundation for our strategy to bring the euro to relevance uh on this new economy.

So the first step is we're going to work with global exchanges uh to have fiat to stable coin on and off ramping. Um obviously our banks are also going to provide this uh but you know how banks are they don't work so fast. So at the start we are going to need uh also exchanges. Um we are talking to the major ones. You can imagine which ones we are going to sit liquidity at the centralized exchanges.

Uh as I said we are starting at at Ethereum. Um we're talking to the most relevant ones out there. Um if you think there's any particular protocol that we should look at then feel free to contact me after the keynote because we are very keen on you know understanding the ecosystem understanding who we have to work with uh where is the demand and so on. Then we will activate uh lending uh at particular uh protocols, the biggest ones of course in Ethereum. Uh because we are talking to people like uh you know hedge funds and uh corporates who are telling us okay if you give me a chance to use the euro in one of these protocols and I can move my treasury on there then I'm the first customer for your banks.

So obviously makes sense for us to on board this kind of uh assets there right? Um so this will attract minting we hope uh once we have this yield uh engine going on it's probably not going to be like 20% or 30% it's going to be a more you know uh conservative uh but we are not targeting the digents who are chasing yield I think they can are better served with other protocols right uh we are targeting more uh you know the builders who are thinking more long term so uh this yield is not going to be something mind-blowing but still going to be significant I believe um we plan to bring institutional volume on chain. That means we plan to bring tokenized money market uh funds, tokenized bonds and other forms of security on on public chains and establish liquidity against our stable coin. This probably will lead to more integrations and in the end what we hope is to have banking adoption so that when you're a customer of one of these 12 20 30 banks you can just say okay I want to open one more account that is going to be on stable coin and this allows me to own and off ramp very simply to Ethereum or another chain we will see uh to get access to all of these uh value um adding propositions uh on on chain. So um yeah I think uh this institutional defi concept is also not new.

It's something that everyone has been trying to do right. So we know there are some lending protocols that are going to launch a new version soon that they say is going to be institutional grade and it's going to on board you know banks and hedge funds and whatever. Um but there's still a lot of work to do right. So this conversation we had previously about collaborating with builders is also important for us because normally what we have seen is that uh protocols are developing something that they say instit in institutional grade but they are basically building what they think institutions want right which is probably not the same like asking us. So uh that's one point that we want to make.

Um if you are building something that you want institutions to use then come to us because we can co-design this together. uh we are not uh you know against DeFi we are completely pro DeFi and this means also that we would like to have this uh this uh conversation going on. So we see three um treasury strategies that people want to use on institutional defy. One is the US uh euro carry trade um because there is obviously some opportunities there because of the difference on the interest rates between the US and and uh Europe uh euro leverage strategies. If you're Euro along then you will probably also need some kind of euro exposure for that and treasury diversification.

When we talk to corporates who could use the stable coin to move money between you know Argentina, Brazil, Europe, Africa, Hong Kong, they tell us okay I could do this could do this on the typical Swift network or I could do this on a stable coin but if I do it in a stable coin then I also want to get some yield out of it. And this you can only do if you can uh you know instantly go in and out of uh yield generating uh protocols which hopefully will be provided by DeFi uh builders on an institutional grade and we think once we establish this e ecosystem and once we have let's say a billion euro moving around we will probably also start working towards a global settlement uh token. So our vision is not to replace SEPA instant or all of these European payment uh networks that are out there because that makes zero sense right uh the payments uh system in Europe is very efficient and we don't think we have to replace that we are thinking more in terms of global demand so if I have someone in El Salvador or in Argentina or in Mexico or in Hong Kong or in Singapore or whatever who for some reason wants to get some euro exposure they should not be jumping all of these hoops uh on a traditional market they should instead just access it on chain and that's where we think the uh big demand is going to come. Uh we have already validated this with some people as I said in Hong Kong for example where we think uh there will be some interesting uh consumption of our stable coin in the beginning and we hope that once we have a proven track record together with DeFi uh we might have a chance to establish a new or another alternative global settlement token instead of only the typical US ones. So where are we today?

We uh have started the consortium uh in October. We are now allowing more banks to join before we go live. Uh we hope to get our license uh ready by end of summer as I said and once we get this license we plan to go live with all of these use cases that I have mentioned today basically in parallel at the same time and we hoped that uh by 2027 we can start expanding and growing the distribution network and so on and so forth. So I hope that people here in the audience will build with us. Uh we're looking for people who can help us with protocol integrations, co-designing uh alternatives, market makers, liquidity providers, payment and settlement protocols, institutional participants or anything else.

If you think there is a chance or there is an opportunity for the euro and your protocol, then just reach out to us because we are really very very keen on uh collaborating uh with with the industry. And with that I say thank you uh with 8 seconds of spare time. So if you have any questions please do let me know.