PANEL: Expanding the Ecosystem for Non-USD Stablecoins

all right good evening I see we still have an audience which is great um okay why don't we kick it off with a brief intro uh 10 20 seconds about uh what you guys are building so um hi I'm the CEO of Mel we're a stable coin issur and settlement layer for Latin America we is our our first uh token CM the token ice colan PES chain hey I'm Julian uh I'm the treasury manager of nosis Da uh from katki um we are building uh deep liquidity for uh URI and G um in nosis chain which are very important for nosis Bay hey everyone my name is Marcus I'm working on Mentor a multicurrency evm platform um that provides local currency stable coins for every country in the world just launched the k a Kenyon Shilling stable coin for example I'm Chris Duffus founder CEO of phonebank we're a type of on andof ramp to web 3 targeting mobile First Cash based economies like those throughout subsaharan Africa and the global South uh we could we work with a number of uh leading protocols like C and Mento to make that happen Okay so we've spoken about USD back stable coins throughout the day um and so this panel is on non USD D back stable coins um USD back stable coins have found product Market fit like it's majority of the market share why are non USD back stable coins important to the ecosystem like why should we care I'll open it up the floor to anyone so um I guess in short they level the playing field uh I mean right now most of crypto is limited to the developing world uh if you want to reach the rest of the world like everybody has their own local currencies um and and this is sort of the on and off ramp the way to gain access the way to actually be able to build like derivatives every kind of financial product is through like non USD coins otherwise it's just going to be limited to like pretty much crypto and a US Europe um this is the way to actually like bring crypto to the entire world I think that overall um we can think of General St Co of having four use cases um one of them is uh crossborder payments another one is uh trading crypto um another one is holding US dollars or holding a currency and the fourth one is on and of ramps and if you think of it for a second the first three are actually mostly for the US dollar um so in the end the product Market fit that non USD St coins can find is being on and of ramps uh at this for now yeah and I want to add to these points I think um multicurrency stable coins are a great addition to Dollar USD stable Co to Dollar stable coins if you're in a country with high inflation where your local currency loses value against the dollar then of course dollar stable coins are great for saving if you want to move into uh a stable currency but on the other hand if you're a local entrepreneur you want want to get a small loan um then you probably want to get that loan in local currency because if your revenues are in local currency and you only have access to a dollar stable coin then paying back that loan can become really expensive as soon as your local currency loses value against the dollar and then for example there um non USD stable coins can provide a lot of value um access for example to credit um in in your country in addition to the use cases that you described like saving um payments but also remittances and of course the whole onchain FX space um that that hopefully also matures and more and more people actually bring their FX trading also on chain I would add that uh in order to make you know there a Nuance each of you many of you said is on and offering ramp right well if you add the availability of local stable coins it becomes payments like oh I want to pay for a cup of coffee I want to pay for a cab ride right and ultimately what that does is um provide uh accessibility to the broader group of people on this on this planet and you think about uh US dollar back stable coins it's really a wholesale product right and in order to bring um uh web 3 to the masses you need uh a a tool or product that's way more accessible and that's where these come into play and you guys are all Innova at the edge um of this Market I'd be curious like what does the landscape of non-usd back St coins look like we we understand the goal part there's some new energy stuff happening um what is a paint a picture of the landscape of non USD stable coins so um I would say it's nent um there's not many people outside the ones in this room working on that um and I mean crypto and stable coins are very much new so like six months ago nobody was working on yield bearing stable coins uh a couple of years ago nobody was working on stable coins at all uh but I think it's going to be very big uh very soon um but I mean right now it's very limited to like a couple of companies who have done like centralized coins and sort of like the other things you guys are building yeah and I mean we heard in in uh the talk by Jasper before we are all about uh stable coin diversity and want to see more and more stable coins and I think we've also seen in that talk how big the existing especially the two big dollar stable coins are in comparison to these things that are starting up but I think it's it is very young a very young industry but still the use cases are there um so I mentioned that we just launched lach the Kenyon chilling stable coin Africa for us is uh extremely important as a as a market um there you can see first microl lending organizations um starting and uh providing loans in local currency stable coins to small entrepreneurs you can see um on and off Rams like phone bank and many others um getting like broader and broader Market access and and actually become more accessible to everyone there and I think this is the key here that it makes things like lending remittances payments more accessible to everyone especially in areas like letm like Africa um where traditional banking system just doesn't work as it does maybe here in Brussels a and where would you say most of the demand for non-usd back stable coin is coming from is it from the um citizens of these emerging country is like where have you guys found that it's coming from so it's uh real world use cases um and I like to categorize like stable coin usage in three categories or like as a store value which is like usdc usdt then there's like stable coins as investment products so like uh usdm Ono uh ethena uh and there's like stable coins that are like infrastructure for for financial stuff so like payments what we've been talking about uh most of the use we've been seeing are like for financial infrastructure So like um settlements payments remittances uh derivatives Etc like as an alternative to like Legacy Financial infrastructure yeah um I would add that uh in order for for them to even uh grow their demand uh there has to be uh some new products coming in uh that unlocks the power of composability um because the reason why people is using US dollar St coins um is because they get to access uh a global settlement layer um but if you're going to transact in the local currency you don't need to access this global settlement layer uh because the the transfers of local currencies are instant normally and free and easier to to to access uh so there has to be a reason for for users uh to move to to to the blockchain and in order for that to happen there has to be new things coming in a good example is no supay of something that is is leveraging uh a n dooll stable coin with with URI um there could be like some guarantees um that powers like smart contracts and basically kills uh the middleman of of the bank for guarantee because you can use Smart contract for that uh things things like that that truly power uh leverages the power of uh the centralization and sensorship resistance um are are things that going to bring people to to to this I would even add in many of the markets we operate in remittances are a huge part of their gdps and as you indicated there are a ton of different intermediaries that sort of make that happen as well as finex that have evolved just to support sort of local currency payouts Within These respective markets and everybody adds a fee there's delay in terms of that value chain and and um you know this could be an addition to that flat settlement layer of stable coins that can make sort of global real-time payouts a reality for people that need it the most remittance is really a big big use case and I want to add it or ADD and mention it again I mentioned it before the whole credit space there's uh I think globally a $5 trillion credit Gap that especially affects countries where the banking system system is less effective or less evolved and I think resolving that credit Gap can actually have huge impact on on on these countries and it's a killer use case if on the same platform in the same wallet with the same on and off ramp you actually can get access to a dollar stable coin to save and to a local currency stable coin um like a canyon Shilling or or others uh to to borrow and to to to get a loan um all on the same platform form all on your phone I think this is really a a killer use case for stable coins but I I'm curious though who's who's going to provide the liquidity for these loans I think in the end liquidity is always hard and if you want to like build stable coins many different stable coins and we heard before we are all for stable coin diversity we always have to work on liquidity for each and every stable coin again so I think here infrastructure is key that's the first thing to make like provision of liquidity very very easy that it's actually also possible in the stable coins that we build that you can go easily into other currencies maybe even into uh from a local stable coin into a canyon Shilling stable coin so that actually nobody is afraid to touch your your local currency and then like more and more micro micr lending organizations actually are really open to use stable coins because it makes their operations really really efficient um and then in addition and this is maybe a bit more out in the future having everything on chain like provides great data for lenders like you can build up new forms of a credit history that is linked for example to your phone number um and and maybe even link to paying back your phone bill or how active you are on phone bank Um this can all count into your credit history and therefore enable actually people to make good job judgement if you should like Provide Capital for that I I I want add that like it's also good business um one of our customers tropicus is buildings through this and and just to give you some context uh there there is an opportunity for like interest rate Arbitrage um Usery rate for example in in Columbia where I live is right now at 3% 30 that's the user rate for banks uh so you can literally land out money at 30% uh and if you see our local coins like Mexican peso Colombian PES so like we we've had like 20 30% revaluation against the dollar during the last year so like if you had put money in a pool in usdc against pesos and and collateralized Loans in local currencies you would have made a killing during the last year uh it would have probably been like one of the best performing products um so there are a lot of interesting opportunities I just think like the infrastructure is starting to get built out but it is going to be very profitable and like at the end of that that's what banks are doing and like I mean uh if you look at at like uh Southeast Asian Banks Latin American Banks they're like they're very big they make a lot of money and I add to the most simple level this reduces friction of movement of money right and you know I don't know what that equation looks like but it's for every you know percentage Point re reduction in the cost of moving funds it probably increases some amount of liquidity for the counterparty just because I can now go back and forth it's it's more efficient yeah I I don't think it reduces friction it's very hard to on board users and until you get a very large amount of users it's actually adding friction this is changing quickly I mean if you compare today uh to maybe two years ago already this is completely different world where we have now more scalable chains where we have more affordable on and off Rams where we have easy to use wallets where we have um more and more infrastructure that actually supports this so I think yes you're right there's still friction for sure but this is being reduced every day and the Nuance though being sort of adoption friction versus transactional friction right like I think that problem is being solved daily uh but I think at a broad level it's you know how do I get uh a local currency who are the counterparties working I spend this at and to the extent that they have liquidity for their goods and services you'll start to see adoption um but this is where things like I think remittance are a great use case because if you drop a couple billion dollars of this you know uh into people's hands in a particular country they'll figure out how to you know uh utilize that in that in their economy okay instead of like just in case we don't turn into debate um uh you guys were alluding to this um what does let's say all the Emerging Markets they have their own stable coin they're uh running onchain what does this unlock for that specific market for that specific nation state what does that look like um I I I think it it locks access to a lot of probably Financial products and tools um and once again a global settlement player than otherwise they couldn't like uh I can tell you as Argentinian um the main reason like that everyone is like like we get access to Dollars thanks to stable coins and an argentinan st I don't think there is one because it would be like a very shitty business um but um yeah it could it could definitely uh make it easier Theon of ramp there's an analogy which I very much like and it's like I feel like right now like in in in most emerging countries we we live in a world where like everybody decided to like build their Ro their own roads in front of their houses so one is a brick road the other one is like uh cement Road and they're all different widths they're all different like uh materials it's it's terrible uh if you're going to ride a car in it it's it's a horrible experience uh I feel like what blockchain technology and like what cryptocurrency does is like it's it's the same pave road all the way it's like standardized rails uh as soon as you have those rails you're going to be able to build like amazing buildings stores like all these infrastructures um sometimes like for for non people who don't live in Emerging Markets it's hard to realize how shitty Financial products in Emerging Markets are they're terrible uh they're terrible they're expensive they're slow and this is going to give access to like I don't know billions of people to like much better Financial products um and it's going to enable I mean millions of businesses to build much better infrastructure much better like products for like consumers I love the analogy about the private roads and I totally agree and I think ultimately what this will do is drive global scale and in the same way you have certain countries and or companies in developed markets that can now sell globally it will a either increase their Market but also can um uh enable the development of global companies and opportunities From Within These emerging economies because now they can operate on the same level as us or Western companies making Financial Primitives accessible is is really important uh part to to all of this and I think it's interesting for example I mentioned Kenya before if you look at mobile money in Kenya it already unlocked um access to at least parts of Finance but it actually did it in in a closed way and if you now look at the payment uh system in in Kenya and mobile money it's super fragmented so actually there really hard to either go cross Borders or to go someone who has like a different mobile carrier than you have so this is an additional Advantage the way that we are building it in an open source way in a permissionless way it unlocks even more because then all of this what we are building works with each other and and uh can therefore unlock growth for these for these economies yeah makes sense so I'm actually from Barbados and previously I could never access like treasury bill youal ever well thanks to Mountain now um I can so it's pretty awesome to see the development um you guys were mentioning this earlier in terms of the driver for adoption for these types of stable coins um what are the vehicles what what do you guys see as the most important drivers to to gain meaningful adoption with these types of assets so again I think real world use cases remittances um payments uh I guess what we've been talking like for some time now like like uh it's not speculation it's not necessarily for like Financial uh usage I think it's more like for getting to like real world users and getting like Financial products in their hands so and to lock um of course easy to use wallets we heard from mobile stack today um I think this infrastructure that is more and more available and easier to use is important accessible on and off Rams things like phone Bank in many different countries um is is important to un unlock this so that people can can easily access these stable coins and swap from one stable coin to the other and I'll give an example of a a specific uh use case that we implemented um where uh you know people are familiar with the concept of an airdrop well we work with the uh Stellar Foundation uh couple years ago 2022 2023 where actually grew a third of all their Stellar usdc wallets globally and what we did was we uh enabled a small little airdrop like a dollar and allowed people to convert it onchain or to top up their phone uh most people topped up their phone and the the feedback we got was that they're like oh this is real this thing that lives on chain that you know people are told us to be to wary about I can actually see the the Merit of that in real time right and so we talk about sort of real world use cases here's this sort of electronic digital asset that you know people can consume and the average person can consume in many of these uh countries so it's highly accessible right and so these are the the types of things like what are equivalent sort of digital Commodities Within These respective countries and and I think those are going to be the lwh hanging fruit you know obviously uh Financial Services can be digitized more easily easily but there are others as well um just to give another example um one year and a half ago like the circulating supply of manuum on nosis was maybe like one and a half two million uh now it's around 13 and it's a growth of I don't know six times or something and the reason is no supay like people is using monium to transact no people is demanding Yuri it grows it works like that you need use cases gotcha um let's say 10 20 years from now what does the landscape look like who knows that's like three lifetimes in web 3 um so it's a very long time um certainly we want to work on having a stable coin for every country in the world um maybe even more local having also enable or enable also local currencies in in in different regions but I think even more there that by that time hopefully also the traditional Finance World understood that this is really efficient way to send money cross borders cross systems um and therefore also institutional world the whole FX trading um come can come on chain and I think already now having different currencies on a blockchain enables so much Arbitrage trading that you could do as an AIX trading house um and I think this is also something we'll we'll see more so for me stable coins are better infrastructure for financial and banking products um when there is better infrastructure it tends to dominate very quickly um even if you see like when they invented containers like it was very like so before containers people were like everybody came up with their own weight of shipping things like let's wrap this in paper let's do this thing and then they came up with containers and like 23 years after like nobody thinks of shipping anything outside of a container it's kind of crazy or the same thing as roads like we have standardized roads like they're made out of the gravel they're the same width cars are sort of standard like everybody builds the same kind of cars in the same kinds of roads I think like 10 to 20 years out like pretty much all bank money is going to be stable coin money uh I don't know if it's going to be centralized decentralized if it's going to be two or 200 issuers but I'm very confident that most of the money in the world will be like based on stable coins like um probably the one feature that I think is lacking for the to be completely dominant is like privacy and there's a lot of people working on that like but once we have like good enough privacy I think it's going to completely like take over like bank money or like Legacy money however you want to call it I might add to that to to your point about like what this future looks like centralized decentralized sort of stable coins you know I good news bad news I think the good news is you're going to have this technology available globally accessible you're going to have certain economies in a that can take the private sector into their hands and trade globally and maybe receive financing you know uh from these big institutions I also think it may lead to global scale financial institutions like the city or Goldman Sachs or JP Morgan that dominate you know uh this sector globally right and so we have to think about like what does that decentralized alternative look like otherwise we're going to have this the same old thing again oh I agree with you like I I that's why I'm saying I'm pretty sure it's going to be stable coins I'm not sure if it's going to be like a decentralized organization or it's going to be JP Morgan actually like dominating the rest of the world uh it might be the incumbents like uh getting this new technology and winning the game again uh hopefully not but uh you never know well luckily that these types of technological uh advancements create inflection points so maybe it'll be one of us and the techn technological advancement also creates choice for the user I mean even if like 10 different central banks come up at some point in the future with Central Bank digital currencies we can use them as collateral we can diversify over these different central banks because they are for sure two bad central banks among those tens and therefore we can diversify and then can offer the user Choice um what they want to use but it also could enable countries like Barbados or Bermuda to be globally relevant from a banking perspective actually as a close an exercise let's imagine I'm Congress okay pitch me why I should create a barbad stable coin so so so I'll tell you why if you don't do it like like if you don't do it like you're just going to lose power to like usdc uh cuz like a lot of financial products are going to get built on that a lot of people are going to start using that so like if you don't like it's not like why would you want to do it like why would you not do it like you're going to get like uh you're going to be in a very bad position um that would be my first argument like it it's already being done you might as well do it yeah and if you're Congress I would say this would be actually the first time you could do monetary policy because currently you can maybe guess how much like money is in circulation what the velocity of your money is and then you can try to influence that by setting interest rates for your Banks and hope that these banks will actually forward these rates changes to your citizens so basically your monetary policy currently is guessing and hoping um when you have technology that allows you to incentivize and to um actually directly not guess but see what the velocity is you actually have a much bigger tool set and I would add access to your diaspora like imagine now you're you know and I'm from Jamaica so we have probably more Jamaicans that live overseas than in in Jamaica and it's that is such a powerful um sort of aspect to these these countries that you know when a uh a president prime minister runs for office they don't just uh campaign in the country they go to all the big cities around the world you know and so if you're able to e now economically tie them they're going to that's how they're going to send remittance back they it'll spur trade and investment and I think you know that's priceless so do it now or get left behind it's kind of the pitch and going back to his analogy why would you prefer to have a worse road than a good road and the same road as everyone else in the world awesome cool I think I think that's it for now thank you guys this was a great panel thank you thank