Can DeFi Lift 1 Billion People out of Poverty with Heroic Mechanism Design? Clayton Roche

okay we're cooking thank you hello hi okay so uh first there's another person on stage other than just myself and he will introduce himself now yeah hey i'm not clean i'm uh ea sports or eric uh i am close i'm from the uh uma community arm called the super umens as well as contribute to harvest finance and a couple other dowels in the space um yeah and i am the community lead at uma and um i've lived among a lot of the world's poor in different countries and so this is a topic that's really close to my heart yeah so i guess just starting off based on the title we wanted to kind of preface it with what we're going to talk through it's not not a sad story right we're not sitting up here watching like uh infomercial asking for donations i think the idea is to talk through a little bit of the the ethos of defy in the ecosystem and where we've seen some progress and hopefully inspire and challenge the group today to talk through where that could go and uh you know here at east denver partially as people are building what that could look like so we know that money is not what makes you happy but we also kind of know that not having enough money can make you quite unhappy and um what did you want to add on this one yeah no i mean i think you know all of us are here and are able to do things like have a bank account purchase a flight uh set up for our financial future and further the space and so being able to talk about the the mass populations that maybe aren't able to do that and what we could do to help them do that as well so just for some context setting i'm going to talk about kind of what we already know i think in this room so poor people are not profitable for banks in terms of financial services we know that you can either have a lot of money and banks are happy to have you because they can lend it out for yield or you can have a small amount of money and they can hit you with overcharged drafts i'm curious in the room who here has ever paid an overcharge fee at a bank okay pretty pretty good thank you for your honesty um micro finance organizations are quite big and cool but they have had a bit of mixed results when you look into the research a lot of times they are used both for capital investment but also for just smoothing cash flows which isn't actually how they're intended they're also just quite expensive so in the interviews i've done in the philippines for example people just reported like yeah we know that option is there but they're paying 25 to 30 apy often and so they try to find other solutions um the third one here is that banks suck that's all on that topic um so this stat right here i think is quite interesting this is what you might not know this comes from a book called portfolios of the poor and i would very much recommend reading it if you're interested in poverty finance what these people did is they went around and they they incentivized people living in poverty to keep daily records of every dollar they made every dollar they spent and every dollar they put through some financial service including peer-to-peer lending and what we learned is that 185 of income meaning almost two times over is actually either lent or borrowed or repaid or used in savings clubs etc so they're pushed and pulled through these informal financial tools and so what's the takeaway here is you know we hear this stat two dollars a day right uh so many million people in the world live on two dollars a day but it's not like they wake up every morning and receive two dollars that's that's the important thing here and so they have this whole life built around uh this whole financial experience built around making sure that they have that two dollars a day and they have cash flow smoothing so on the basis of this book this is a quote from this book and this is a video that i took in the philippines money management is for the poor a fundamental and well understood part of everyday life it's a key factor in terms of determining the levels of the success that poor households enjoy improving their own lives i butchered that a little bit but i think you get the point yeah so with that i think hearing about the population and what they have accessibility to 607 million of these people have have a mobile phone but don't have a bank account right so when we talk about maybe how to get them into crypto i think is the next question there's not a not a barrier to the technology already there's a barrier to accessibility and ease of use of some of the financial tools that we all have on a day-to-day basis so let's get a can i get a quick drumroll please now we have the the groundbreaking solution for how to get them into crypto play to earn all right play to earn is the solution here we go where all of our axi fans i'm looking around seeing people on on their phones pressing buttons maybe people are playing play to earn here today um joking aside i don't think we're here to debate you know ponzinomics as a sustainable income source or a long-term uh you know solution to end world poverty but what i don't what i what i do want to call out is how big that space is and the opportunity it presents for us right so uh looking at axi is kind of the the trailblazer in the space in november of this year they surpassed 1 million daily active players and cumulatively in december they passed 10 million players overall right it's one of the largest blockchain use applications and while they started on ethereum now we're using ronin for cost and performance issues so what does that represent for us we looked through coveted pandemic we talked through philippines malaysia cuba a lot of these poverty-ridden countries now are turning to play to earn games as an income source and i'm not going to argue it personally i don't think it's sustainable economy right so how do we transition that opportunity into ability to set up for the financial future ability for broader adoption in the space and how do we build the infrastructure to support that as well yeah i think those are some great points personally you can go ahead and skip personally i just you know i was in the philippines um doing interviews about uh informal finance before the axi sort of craze started and i started asking people like you know have you heard of bitcoin have you heard of d5 you know basically bitcoin got mostly knows occasionally yes i think there was no defy yeses um and kind of a funny cycle or sort of a funny anecdote about this time in my life was like so i was interviewing different people and also just living there for a little while and i was using tinder at the time and this one girl ghosted me but about a month ago she she messaged me to ask if i was an axie manager uh because now she knew about crypto you got your moment back up all right revenge i'm not gonna be your manager so yeah but pde is the space i guess kind of looking at you know how do we use that as a as a bridge into crypto and d5 and into setting up kind of uh better decision making and behaviors for long-term financial success so uh not saying this is the end all be all but wanted to assert today gaming guilds i've seen present presentations today even the last one from the tec talking about stewardship community building leadership um gaming guilds are blowing up right one of the big original ones ygg we're looking at it by the thousands both of members as well as organizations standing up and building community um can i get a can i get a poll here who has meta mask on their phone okay yeah i think if you didn't you probably do now because you had to sign up for your meal ticket but the the point is a lot of these p2e games and the guilds kind of start with the basis of how to even transact on the blockchain right start with your wallet uh build on that look at your fian on off ramps with finance or binance p2p and then build into okay how do i do basic transactions how do i cash out how do i earn so from there building in those communities not just those basics now they're earning maybe a short-term income stream let's let's focus on education let's focus on knowledge help maybe it's uh maybe it's you own axi maybe it's you own a new income asset from the start and then you learn to save portions of your money behaviors and habits clayton as you mentioned that maybe they do some social pooling today but aren't used to or have tools that they're able to do now this basic infrastructure is really huge so something that that came up with that cell phone thing right there's 600 million people with with smartphones but without a bank and so that means they have the technological piece they need but now we have play to earn games which are leading to basically gateways that's kind of the biggest thing so you have the technology piece of the puzzle and now you have the financial infrastructure piece of the puzzle i've literally gone into a 711 and sold ether on a on a kiosk they have this kiosk you can like connect to one of their apps you send the ether to the address and it prints out a little receipt and the fees weren't great i think it was like a five percent or something and the spread might have been not been generous but you take the little receipt up to 711 desk and they pay you cash out for it and i think that's pretty incredible yeah that's awesome so a little bit of an anecdote here uh i've dabbled in uh nfts right so trying to experiment to be interested in the space myself and a few others from the super room endow uh decided let's start our own little you know play to earn guild so uh early january we started we bought a couple thousand dollars worth of uh these mechanical horses this game for those not familiar it's called pegaxi um and since then i think it's really prove the appetite around this we've had you know no advertisement minimal financial uh investment or any kind of human capital time associated with it and it's flooded with 400 members we have uh recently hired two two of these folks on full time to kind of manage the community and help focus on education growth communication and 230 earning assets now i don't know if this thing is going to go on for a while be the next axi or if it's going to flop in a month or two but what i do know is that there's an opportunity for these folks today where they see this as an income source and now how do we focus on education or onboarding into other dow's communities into crypto and using some of the tools and infrastructure to better their future as a side note i think a handful of our members now have actually started joining a couple dows i'm involved in which i think is a really cool way to kind of see some of that progress and and potential for the future and was this something you set out to do right from the beginning or did this kind of happen by its own momentum no i i mean honestly i like to flip a nft here or dabble in something and i think someone kind of shield this to me and i said yeah let's let's try it out and experiment with it and yeah i don't know i think it shows progress and opportunity so i'm excited about it it's cool so i'm going to talk a little bit about one like just some low-hanging fruit as far as these financial concerns go with defy so um you know i talked about kind of this cash flow concern with in with regard to poverty finance savings is often quite high friction savings is quite expensive if you don't have access to formal financial tools just literally having somebody hold your money and keep it safe and reliably return it to you at your request is like quite a high thing to ask for and people end up paying a lot of money for it there's also just literally the fact of so there's this phrase when you study poverty finance that you'll see a lot it's called meaningful sums of money and what that means is kind of obvious right a chunk of money but actually getting that amount to buy something to make like a life-changing investment for example is quite difficult and so when we start to look into crypto solutions i'm really grateful that we're seeing a lot more l2 and transaction scaling that's still ethereum secured so that saving solutions can be nearly cost free but then you can also start to tinker with things like crypto enforcement gamification and credit systems so if we can think about leveraging all the tools that we've built for ourselves here that we all are sort of familiar with uh just in the d5 space in general if we can start to onboard people who started learning play to earn and earn small amounts of money into these saving applications i think we have just like a lot of real space to experiment particularly with incentives design so i'm going to touch on that right now there's this really cool bank called grameen bank so this is like a tradfy learning it was based in it's based in bangladesh and its co-founder its founder actually won the nobel prize for creating it and one of the programs that they did that was quite successful was they offered people a higher apy to contribute to at least at least one month one dollar a month for five to ten years so this has been credited with the original yield farm i think this predated the synthetics farming contract and it was quite successful so the bank's own deposits went up 300 in three years and so you can see how this example would carry over extremely well to crypto so but you could have you could remove that intermediary right you wouldn't have any um custodian of these funds you wouldn't have any delay um and you can start to insert like different economic opportunities into this you can insert other kinds of incentives and so that's something that we're going to talk about here in a moment yeah so i'll touch on that a little bit i i love the uh half meme joke to synthetics there because you really could do some of these types of things so um with umo specifically wanted to touch on a couple ideas of maybe how this is working or how it could work um not gonna dive into all the technical intricacies but one big part of uma is their flexible optimistic oracle and one of the needs with that is we've seen increased oracle adoption over the past year and so there's a need for human verification of some of the oracle requests that come in uh to validate those and so now we've started a optimistic proposal program for a human to validate data and then validate those uh those mechanisms and rather than ponzinomics where it's an inflationary token that's going to dump after a couple months this is a little bit capitalistic but it someone can come into the space provide a service and earn a sustainable compensation for that service while contributing to overall adoption of a broader piece of infrastructure within d5 what excites me about this so what excites me about play to earn and this earning opportunity is like so we have this we have the super um dao and there's a big opportunity in this dao and a lot of dows right now to show up as an anonymous name with a cartoon face and earn thousands of dollars a month and it's like many times the salary you could get in most of like rural philippines for example but there's like certain even though it's permissionless technically there's certain like cultural and intellectual and just like marketing conditions that need to happen before you can get there but what i really like about this combination is like you come for the games and you come for this like play to earn income but then there's opportunities that we think will actually be like more long-term sustainable returns so that we could imagine this program going on for a longer time and i i just really like this combination of things working together yeah absolutely i think one other piece we wanted to touch on maybe a little bit of uh alpha for for the group not quite ready for prime time but the concept of the optimistic reward through uma so here uh distribute individual nfts to to users and based on any criteria that can be defined by a rule set then can use the optimistic oracle to incentivize behaviors or actions right so that may be interacting with a protocol it may be uh you know put into your point the remain example could be staking something in a in a specific place to incentivize savings and i would love to see that in this space develop into how do we encourage longer term financial behaviors to set people up for the future i think even more broadly when you talk about new protocols coming up instead of air dropping tokens to someone because they've previously interacted with something how cool would it be to use the optimistic rewarder and incentivize them to use for the first time or to help educate market on the new protocol as well so um to that point here is a picture of hart lambert presenting on the rewards as a service in this very room and he's sitting right there if you want to ask him questions after our chat yeah and i guess kind of where we'd want to leave folks with or have a little discussion about is kind of what else in d fire what else are you building here at east denver could contribute and kind of further this space i think clayton and i very much feel like there's there's progress and there's inroads to continue here but obviously lots more opportunity to address and and would love kind of following the the overall spirit of d5 to continue working towards that together yeah definitely so um after this talk is over and but after questions we will stand outside for a minute if people want to kind of let us know what they're building we'd love to touch base we also have our twitter and stuff you can send us some dms make sure to get your poep for attending this talk win poep now po app um and yeah love to hear some questions or anecdotes feedback thoughts feelings