Superfluid Reactor Summit: An interconnected Web3 economy

[Applause] [Music] we are ready for our next talk and i'd like to bring on mike back on stage and give us an overview and some of his thoughts on the interconnected weapon economy we've already kind of gotten some sneak peeks around what we think is that world and how we think it's going to evolve so uh i'd like to uh ask him to turn on the video and say hi and kick us off with this talk welcome hey hi kartik again so um yeah i'd like to talk about this idea of the interconnected web free economy uh let me just try to share my screen and if anyone can let me know if you guys can see anything everything is good i'm just trying to put it full screen what do you see yep brilliant so yeah i'd like to talk about the idea of having an interconnected web 3 economy it's not something that we hear every day in crypto um so it's a little bit tricky to try to explain it so i'll try to explain it by telling how inefficient our current kind of financial system is so i'm sure that everyone here relates to this idea or this feeling of having to queue uh at an atm just to take some cash out to make a payment when you maybe are in a hurry or you want to grab something quick at the store so um you know this is one of the best ways to understand how inefficient our financial system is and was um of course you also had issues where maybe you were ordering a delivery or some sort of food online and you got a kind of fail transaction and sometimes it's because of course you didn't have enough funds on your card but sometimes it's for other reasons and so this is a very frustrating experience other times you are maybe someone who is like working in the web free economy and you know you are just like a freelancer or contributor and you're just waiting to get paid maybe as a ux ui designer for some design you have done and it's just a business that pays you late because for example there is an internal process which is to happen for clearance or just even to understand your details or you know your bank account details to send the money to you so there are a lot of inefficiencies in kind of the fiat in financial system that we can experience every day even though we have been innovating so hard around money so for example you know the world has changed a lot from sending checks over email to being able to put your credit card details into a website and have a subscription chart to your account every every month or so so even for like this world that we have innovated so so far so that is somewhat seamless and abstracted even in that kind of subscription model there are a lot of inefficiencies um both for the consumer or the one who is actually paying that has to for example input the data and then making sure the card is not expired and if it's expired to renew it but also for the merchant so if you are like a sas company that has hundreds or thousands or or even millions of users even just a small percentage of these payments failing is a massive headache for you so to put some numbers to this let's just look at a report by delight that was published in july 2019 called economic impact of real-time payments so all the businesses interviewed for this report um you know 31 of them say that their business would be willing to pay some type of fee to ensure they receive all payments immediately so it is a massive uh interest from from this kind of inter instant payment let's say but also if we look a little bit deeper into the report we see that you know the slow speed of payments is somewhat holding up capital in the system so there is a lot of inefficiency in having to deal with delays when it comes to payment processing it's not only just on the operational side but it's also on kind of the social side so you know real-time payments would make financial services more accessible and attractive to consumers and also they could potentially help consumers budgeting because the less delays the less variability the less variability the more certainty and enhanced it's easier to plan around your personal finances so all of these are real real problems for both the consumers and the business world um but you know have we innovated around this have we tried to make payments instant uh from a fiat traditional financial system point of view yes we did and of course in some countries we have seen an uptake of instant payments for example in korea and the united kingdom and another is a little bit less so looking at this chart you can see for example the uptake of instant payments let's just call them instant because real time doesn't really fit what these are so here you can see how korea for example have really started to use mobile wallets or even you know fast payments that are bank bank transactions that are instant so that your money gets to your wallet as it's sent so there is no time delay between when someone presses send and when you receive it or just a few seconds so there is no you know days or hours of delay so we have done something but is not probably enough and this is still very nascent it's a new industry the instant payment industry is like not then been there for over like 20 or 30 years so if we if we try to look at how much our society has evolved over the last say 10 years and we look at how the payments have evolved we see a little bit of a lag let me try to give you an example here so imagine that you know you are in your 20s and you want to watch a movie on a saturday night how the old world worked is that you had to go to a shop and try to rent a dvd for example if you didn't have the movie at home and you know everyone here that is you know 25 or 30 and above knows blockbuster and you know you really had to go to the shop so you have to go get it um then maybe you wanted to see say matrix and matrix maybe there were five copies available and they were all five out and you have to change the movie so you have to browse you know the whole shop to find another movie to watch they also have a limited catalog so you can't see every movie you want you kind of have to choose the ones that are there and it's kind of high effort for both you and for the ones that have to you know refill the shelves and manage all this kind of physical goods movement around now of course you know that netflix have been tackling this issue and so they had this beautiful paper catalogs or you know web catalogs that you could choose a movie from and then order it and then it would come to your home as a dvd so this is a massive improvement because a you have a massive catalog now you can really choose every movie you want is lower effort because it comes to you but there is still a downside which is it's somewhat delayed it doesn't come to you instantly so we all know that netflix have evolved into a kind of web online streaming platform and so today what we can do is that you know we can see the movie we want across all the catalog in the world instantly here and now as we want it from our couch so is a massive change in society in terms of service provision it's a lot more comfortable there is a lot less effort and so we have been seeing this massive transition from something that was a very high effort and very limited and very expensive to something that is very easy to consume and where we want it when we want it and what we want as well and this kind of where we want what we want when we want has been somewhat characterizing the latest generations that have grown up in this world where we can just decide what movie to watch in a second and then have it delivered to us immediately the same concept of say amazon prime next day delivery what you want where you want when you want and the issue is that this new generation has to deal with a payment infrastructure that is nowhere near these expectations so let's look at how for example a sas payment looks like so we believe digital money is somewhat broken because we ported this outdated financial system to the digital internet native economy we're experiencing every day so let's look at how kind of a software payment looks like normally in the sas economy you normally start signing up for a business um in one moment let's say now and let's assume this person stops using that service in a year time so there are two actions from the user here they kind of sign up and kind of log out or sign off so they don't want the payment anymore right so the system anymore so it's one year and it's just two interactions the start and and the end um however if you look at how our payments world work today especially with online credit card subscriptions this requires 12 interactions between some of the service provider systems and the kind of consumer systems in this case and all these interactions take time effort cost and can fail so across all this period of one year where you know the user has been using the service a lot of items can actually go wrong so what happens here is that you know maybe one of these payments is failing and normally what would happen is that someone will chase you up maybe tell you to update the credit card details that the one maybe was expired and you have just to put a new one in and so there is a cycle that starts that you know might just take some effort and cost from both sides because on one side they have to chase you up and on the other side you have to update the data but normally it's resolved say so you know your page is a little bit delayed the system doesn't stop the service is available to you and everything is fine with the issue that there was some cost in the process that was additional to what would have would have been needed if the system didn't break down and the payment didn't fail however in a big amount of these situations over 10 percent what happens is that the failure of the payment discourages the user to continue using the service so this actually was a user that was willing to continue paying and suddenly uh you know he's not a user anymore and so you know how big is this problem like in the sas industry alone uh well it looks like 11 um of failed payments turn into churn this is uh according to a report by forrester in november 2020. so it is a big value and if you consider scaling this across a large organization on netflix i can imagine that it generates quite a lot of cost so um you know let's look a little bit deeper into what this kind of payment failure means for the user for example so uh you know there is a decrease in customer satisfaction clearly there is an increase in cost of recovery because they have to recover the funds sometimes the user maybe didn't pay but then never pays and this generates some debt so you know failed payments can turn into bad dap that is really hard to collect because it's really hard for a company to chase you for you know 11.50 that you have to pay to them but if you scale the amount of users that have to pay that amount that never do it can create a bit of a revenue issue for the sas provider so it is actually a big problem so we believe that uh services should fl as services flow in real time from provider to client payments should work in the same way so we don't have we we don't have to have so many more interactions uh from you know that from both parties to make this agreement work so uh we believe in a better way and so we're trying to dissect how that could look like for especially this kind of sas industry so let's think about what i was the example i was doing before where someone signs up today and then stops using the service after one year with this kind of 12 payments one per month in between so what would be the kind of ultimate solution to this problem well ideally the minimal effort solution would be that there are two interactions here when i sign up and when i stop paying and so it would be ideal to have this interaction when i start this is i start subscribing to a service i basically start potentially paying and then when i stop i stop paying this is the most ideal situation because we are coupling the action of turning on and off the service provision with the payment the issue is that if we do this with a traditional system you would either have to pay everything up front and that is unfair to the client most of the time especially in a consumer market or you have to pay everything at the end with a very high risk from the provider of the service so this doesn't really work and that's one of the reasons why we have subscriptions on a monthly basis because they make it easier for both sides to at least manage their revenues and cash flow but there is a better way so imagine if we could start signing up for a service and start the payment at the same time and then pay along the way and then stop paying at the end so imagine just the ability of sending a small fraction of a dollar or a penny every second or in real time from one side to the other as the service is provided to the client the payment goes back to the supplier so that is a very powerful idea and you know it can really unlock a lot of value in our economy because it removes all this friction with this 12 payments or even more if you're signing up for like say 10 years or five years or if it's rent going to you to your landlord so we call this payment streaming is this idea that you can send value over time in a frictionless fashion on chain between parties and i just want to kind of try to expand more on what does it look like when multiple parties are trying to start this kind of payment among each other so um just for those that don't know the kind of value provision of streaming or what they bring to the kind of in terms of features uh let me just detail them for you in a second so why streaming why would you want to send money over time a fraction of a penny per second well first of all you have this kind of constant flow so both parties know the payment is ongoing and every second money is moving along the way so it's fair for both because nobody has to pay up front or at the end but you have an atomic swap between service provision and and value payment also you don't have to lock any capital because your capital is only used and then moves across to the other side in real time so either you have it or the other person has it which means both sides can put that capital at work while it's not moving and that transaction is really instant so it's really powerful for per capital efficiency also these streams are interconnected so if you pay someone in a stream that other person can forward that on to whatever the person wants to so they can direct say 20 of the stream to some savings account pay the rent pay some of their expenses or bring it into d5 so you can create concatenated streams in an interconnected economy also you can have open-ended streams that don't have an end date so if you have an ongoing service but you don't know when you're going to stop using it you don't have to know in advance or set in advance and end date so it can be an ongoing payment rather than a finite payment and also there is no gas fees on the chain for as long as the stream is running so you do pay gas to open a stream edit it or close it but you would never need to pay gas for the status quo or keeping the flow running and this is a very powerful you know economic structure so that you can actually move any amount of money between two points without paying any fees for the ongoing flow of money and all of this comes with a simple token wrapping so you know to add all these features to any erc20 token all you have to do is just wrap it with a superfluid wrapper so that's why streaming is so powerful because it has the ability of leveraging all these features together so what would this look like um you know among multiple parties so as you can see here i just tried to map blocks as entities or consumers or businesses and the green lines would look like streams and that's kind of the value flowing between them so imagine how efficient it would be if a business could receive all the revenues in a stream and have them say immediately available on a per second basis and then use all of these revenues to then pay their suppliers and making sure that they you know they can pay in real time so this quantomatic business could have all of the revenues in a stream or a big chunk of them and then all of their expenses so imagine they're almost equal because they're growing aggressively but without basically borrowing any capital then you could create a company or an organization which really works on a very thin buffer they don't have to have a lot of capital in-house to absorb the shocks of you know uh normal traditional cash flows of course they will need some buffer to potentially manage streams changes if someone stops paying then the stream will stop and so they need to absorb that and they can't just pay out directly but is greatly reduced and so it would be very efficient for an economy to run in this fashion but it's not just about you know business to business trade or service provision it can also be for something like investing in real time or exchanging so let's add in here an exchange now you're sending a currency and you are receiving the other currency in real time what this allows you to do as a business is if you have revenues in say dollars or the dollar equivalent in crypto that means that you can pay your suppliers in a different currency and get the real-time market exchange rate at all time so you don't have to bet on it you can if you want to but you don't have to so now you can see how this can expand even further so imagine a closed loop now where you know someone is an employee in a company and gets paid in a stream goes out there in the world and um you know pays a subscription to some service like missouri for informing himself about crypto and then someone at mastery is an employee as well and or a contributor and gets paid in a stream as well so what you can do here is you can do some sort of closed loops where the money flows really across the different players and doesn't really sit anywhere but it is really just efficiently flowing across the economy so if you were to expand this even further you would have effectively an interconnected web 3 economy where value could throw frictionless with no delays across the different players and have an allocation to something that is valuable or meaningful at any time so that you can direct capital to what is meaningful for the economy or what is convenient for the economy so is is this kind of idea of having an interconnected network where financial players an economic player can interact one another without intermediaries really and with instant or real-time payments and the ability to have this flowing across them without any queues or delays that could create inefficiencies so you you might look at this picture and say wow this is very interesting but you know it's utopic or is far in the future and uh you know we didn't see this yet so what i'd like to share with you now is um a 3d visualization of just 300 wallets that are streaming stable coins on polygon and they are doing so in real time over super fluid protocol so what you're seeing here in this visualization is polygon network on a stable coin and you can see how there are micro economies like the one in the middle of the screen now where there are different addresses in this case interacting with streams to one another to power a micro economy i tuned down the amount of uh addresses in this visualization to show you exactly how micro economies are working so this could be easily a super app which is doing some interesting financial transaction or just distributing tokens this one it's more like a reward dao or a reward stream where someone is rewarding a lot of contributors a small amount of you off of civil coins um over time and then if we go here we see like a circular economy where players are transacting to one another in what it could even be like an endless loop so there is really a lot of opportunities um that we could build with this kind of infrastructure now let's expand to more than a thousand wallets and look at what the polygon network looks like on a stable coin as well so this is over a thousand wallets and now you start seeing how it looks like a brain structure there is a lot of interconnections among different players and you can see rather sophisticated connections like the one in the bottom center of the space of the screen now where we're going to zoom in in a second where they could really build this interconnected web free economy and value could flow in real time across all these players with no friction so if we were to do this with 100 efficiency which is of course impossible to achieve we would reach about infinite velocity of money streaming so that there would be an infinite infinite velocity of capital which would be very very effective in you know reducing friction and reducing cues um in in our economy so i just wanted to kind of leave it there uh with this visualization of the polygon network because the the possibilities are somewhat endless and i believe this concept of a frictionless interconnected economy um has all the potential um to you know transform society fundamentally because you can generate economic growth without having to inflate the pie by just reducing inefficiency in the existing gdp that our country for example is generating so thank you very much for your time today uh if you have any questions you can ask them now or you can find me on twitter at michele delisi or on discord speculated finance and we would love to talk about what you can build with these tools like what applications we can generate and you know if anyone has any idea we would love to hear from them that was uh amazing i think uh the question i and everybody has on the chat is that is an incredible visualization who made this thing what did you use and how can we make it for other things yeah so um the visualization um is actually done by someone in the network of francesco so i think he would be better place to answer that and he's uh he has been hacking it away just for this presentation so we could uh yesterday night he was just doing it so that we could have it uh for today but um it's just a start you know we can do a lot more and you know we can color addresses based on what they do so if they're a dao or if they are an exchange or an end of user wallet um so you know we are just getting started that's that's amazing and and it's like overall just i think a really good way to kind of think about structuring how we think payments would work and you are gonna i think this kind of came up in our panel earlier too which is the second you kind of have anywhere from multi-chain world to multiple apps talking to each other and just overall composibility then most things turn into a routing problem and that's where most of the efficiency comes in and being able to say hey we can make this process or cut this step is an actual massive improvement and uh you're just going to get that as a default tip which is which is great my kind of only other question would be uh actually let's see i feel like there's a comment coming from oh no it's just friend replying to uh who made that visualization on the chat this is great uh well i think the questions i want to ask will probably overlap with the next panel so i'm just going to pause here and we'll just kind of go into the next one early because i was kind of curious about more real-time application examples but that's exactly what the next panel is about so i want to thank you for uh doing this chat and the presentation and uh i love to kind of bring on the next data panelists thank you kartik it was a pleasure right