Verified USD Foundation - From Old Notes to New Coins: Collaborative Strategies for Small Issuers

all right thank you um it's great to be here uh thanks to the other sponsors and the organizers for putting on a great event I think this is uh you know going to be really helpful for everyone in the industry to connect and and come together um I'm Matthew commins president of the verified USD Foundation uh I'm going to be talking about uh a little bit of a historical perspective on stable coins uh and private currency generally um um before we get into that I wanted to just let me see here there we go um I can just briefly mention uh the verified USD Foundation we are the issuer of a stablecoin usdv uh launch back in November it is fully backed by real world assets short-term treasury bills uh that are tokenized we have two partners uh our technology partner is layer zero who is the leader in Cross chain message and we also have Matrix port a major crypto financial services provider out of Singapore we are the exclusive leny of a technology called color Trace uh which allows decentralized minting it allows to track which Partners bring new capital into usdv and then we're able to programmatically share the yield with those Partners so in thinking about uh where we are today uh we have supposedly decentralized systems but uh much of the stable coin volume that is is happening today is still through two private centralized institutions and in trying to make sense of that I mean there's lots of upstarts and many many companies here uh trying to get into the market as well uh I thought it might be helpful to take a little bit of a history lesson because while stable coins themselves are new since about 2012 the idea of a private currency uh definitely is not um private currency have been around for for a long time as you'll see and I think there are some lessons that we can take from a particular point in history where uh private currencies actually played a really important role in the United States um so we'll be talking about what are the lessons we have from that uh how are we at usdv applying those lessons then we'll wrap up by talking about our community and how we want to partner uh with many of you here and others in our ecosystem so private currency isn't new actually the first coin ever was Private um you know archaeologists have have found uh these kind of coins from ancient Lydia which is now uh Turkey um was about 630 BC and uh it appears that these were from a merchant a merchant that traded in in metals and he applied his signate ring to metals that were of consistent quality and consistent weight so uh you know these were adopted throughout the region and then later the king Kings of Lydia and later you know the the rulers of Greece as well started minting their own coins and eventually made it a royal Monopoly uh so it was not something that was uh was open to the private sector anymore in many cases uh we see similar things with the first paper money uh paper was invented in China and uh the first paper money was used not by the emperor but by Chinese Merchants who did not want to transport coins over long distances where they could be subject to thieves and so forth so this is called Flying money it was basically a bill of exchange um about 841 uh later of course the Emperors did uh provide their own currency and um again that that came to dominate uh also we see here banknotes um the First Bank notes uh I mean banking really originated in in Italy and in Venice during the 1400s and the First Bank notes were literally notes notes from Banker to Banker or you know families like the medich this is one uh for for some trade between Florence and Venice um and again you see governments come in um and especially the bank of England which was really the First Central Bank as uh as we know it in the late 1600s um but I think for us what's most relevant is a certain period uh which is known as the Free banking era uh in the United States this um was really the Golden Age of private currency if you say when has private currency been really successful uh this is the most time in in history where it has been and and why is it 1837 to 1866 well 1837 was when uh the US President Andrew Jackson uh there was a central bank at that point um and Andrew Jackson accused the Central Bank of fraud uh he had Congress actually let the charter on the bank uh run out and not expire he had the president of the Central Bank arrested and then for a period of almost 30 years there was no Central Bank in the United States um there was still uh you know there was still a a um a government issued currency the government still made gold and silver coins but there was no Bank behind there there were gold dollars and silver dollars but there wasn't very much of this and they were in really high denominations it's like if you only had like a €2 200 note that was the only that was as small as it could get so uh to to supplement that it was actually encouraged that there be private Banks and you know there are about, 1300 banks at this time um each Bank producing multiple different denominations of currency um so you had about some somewhere over 8,000 different bank notes that were circulated in the United States during this period and it wasn't just Banks I mean you see here this is the Georgia Lumber Company issuing its own money uh railroads were were major issuers of currency during this time um but but really could be almost anybody you had restaurants issuing currency churches issuing currency um so um you know really just like anybody can kind of create different different tokens today uh you had something there um but but one of the really important things is that this is a time of massive economic growth uh the United States before this period was largely an agrarian society and this time period um you know the these 30 years was when you started really seeing canals later railroads factories uh there was just such a major economic transformation the economy was growing at a much faster rate during this period of private currency than it was before so we can't really say that private currency caused the economic growth but we can certainly say that strong economic growth can be consistent with an economy that is largely run uh on private currency so so how did this actually work I mean how how did you live in a society with 8,000 different bank notes um well one of the ways that you you did it um is through and it's a little hard to see the the background there but through transparency um basically you needed to have information and uh one of the most common publications of this time was Thompson's bank note reporter this is something that came out twice a week uh there were there was there were 100,000 subscribers which is is kind of a lot there were only 17 million people in the US at the time uh but this went state by state it was about 30 pages listed all the different banks um you know if there were any bank failures or any uh any any issues there if there are any counterfeits um and importantly it would list the discounts which were the banknotes that were trading at par that could be redeemed for a dollar in gold or silver and which ones were were were having a discount um the next Point uh that was really critical that we can um apply today is uh sharing risk and reward um and how did this work well actually at this time the banks operated in Networks they it wasn't really formalized networks like the Visa Network or the Swift Network that we have today but uh Banks work together and the way that they did that was that they would hold some of their Bank notes on deposit at another bank so if you're Bank a you can take some of your bank notes bring them over to bank B and hold them there um now that's risky in some sense you know Bank B could go bankrupt um and also you're certainly not going to earn as much money just holding them at another bank than you can by lending them out but this promoted trust between the different institutions and if you held enough at another institution you can actually engage them as a Redemption agent so people could take your bank notes bring them to another bank and get gold or silver back and this is something that um usually happened within a given state but for things that cross different states there were plenty of independent Brokers that would uh would serve this function as well and then finally fungibility uh or you know somebody was talking about the singleness of money before you know a dollar should be a dollar should be a dollar so um you know this this happened more than any other place in New York state and the reason for this is that New York uh had a state mandate that any Bank in New York state had to have a commercial relationship with a major Bank in either Albany the capital or in New York City to redeem their notes so what this meant is that throughout the United States at this time if you had a New York bank note it was much much more likely that that was going to trade at par or very close to it than one from any other state because they had these Redemption agreements again as long as it wasn't counterfeit um you know you were uh you know you were in much better situation and this is a big reason why New York was able to consolidate its position as uh the financial center of the United States New York was not the richest state you know this is before the Civil War the richest states were in the south Mississippi was the richest state in the Union at this point um but New York was able to consolidate its position uh as the financial center uh because of this so um can we apply these lessons today uh well maybe not one to one but but certainly there's some takeaways that I think are relevant to the stable coin industry and when we think about you know private currencies generally um so the first is transparency um and again apologies that you can't quite see see all the contrast there but uh you know we at USV uh we don't need the Thompson's bank note reporter anymore but we do have onchain transparency um as will'll go through and show you know everything back in our stable coin is uh is onchain on the eight different chains that uh that were listed um next point it's all right we re reboot there um so unchain transparency um then I can just talk about the other ones but um um but um the next thing was sharing risk and reward uh so we share risk and reward through the color Trace algorithm as we talked about and then the third being uh fungibility um so we will talk about that again um but um I mean I can just explain so our our transparency uh everything that we do is on chain so um we are backed by token organiz short-term treasury bills um those short-term treasury bills are held in a contract uh on eth maet um $1 of usdv is backed by a dollar of the collateral token uh we have a transparency panel so um Everybody um you that includes uh verified USD Foundation includes layer zero uh other third parties like curve uh they can come in they can have readon access to the accounts they can see all the uh you know all the different in uh um different collateral that's there I think we're on slide okay I'll just go through I don't think this is working anymore maybe I can just say um okay yeah um but uh yeah every so everything's on um we have uh you know full transparency into that uh also we have realtime proof of reserves through a chain link Oracle um so that was transparency uh the next Point um the slides may may catch up at some point um is fungibility so we are the first token that is built using layer Zero's Omni chain fungible token standard so that means that every uh usdv is born on ethereum mainnet because uh that's where the collateral token is and it can then be burned and remitted on any of eight chains today uh eventually it should be many more chains uh layer zero connects to over 65 different blockchains so that's going to be really critical for the growth of our ecosystem um and then uh you know finally talking about color Trace uh and sharing risk and reward uh this is really the thing that is kind of most unique about usdv um were the exclusive lency of color trace and what that allow allows us to do um we actually don't create new usdv ourselves uh at the foundation what we do is we provide a legal Technical and governance framework where other parties can come in and create usdv um so we're partnered with uh organizations like um you know the major dii protocols we with eight of the top 10 dii protocols centralized exchanges and OTC desks and when they come to create new USV it can be by sending a wire it can be by create usually it's by converting from another stable coin we're able to assign that with a particular color to for the partner and uh wherever that goes throughout the ecosystem we're able to track that and programmatically share the yield with the um participants that uh that brought that into the ecosystem um let's see are we able to get the slides working again oh wait hold on are we getting something here we got we got one no Perina no okay wait hold on we're getting it's slow it's like uh 10 clicks for one thing okay I don't even know if I'm moving this but um something's moving ahead okay transparency tability lessons okay great okay there we go decentralized minting um color trait we talked about that okay Partners let me stop here so we have a lot of Partners uh again a of the top 10 D5 protocols um we're on eight different chains today many more to come um a lot of great support from different wallets Market data uh and and infrastructure providers but um you know looking ahead um we're really all about collaboration you know compared to other types of stable coins we're set up as a foundation everything is on chain um it's really about bringing others into the ecosystem so we're here at stable Summit uh looking for more chains looking for other stable coins that we can partner with and actually as well looking for other um other operating Partners right now we have two operating partners Matrix port in layer zero uh we are looking for others that can actually Beyond just owning a color and minting USV um actually play a role in the governance and economics of the USD project the usdv project itself so um really excited to be here um and looking forward to meeting uh talking with the the teams here see that I'm just going to trying to get there we go um so yeah so thank you very much um you can follow us on Twitter uh I'll be here um both us as well as the The Matrix sport team at this conference and throughout ECC so uh looking forward to to meeting you and and working together thank you very much