Glo Dollar workshop

all right let's get started thank you everyone for being here um my name is Jasper drens I am the CEO and co-founder of glow dollar and here is Karm lucasa uh CTO and co-founder of glow dollar uh but today we're actually not here to talk about glow dollar we're here to talk about and discuss with you and collaborate on stable coin diversity and fixing ethereum's single point a failure so what's the problem here well the problem is that right now usdt and usdc comprise 96% of centralized stable coins and that means that we're basically trusting two companies to control pretty much all centralized stables and centralized stable coins have grown to become critical ethereum uh infrastructure so they facilitate Dex liquidity we did some research right now 43% of all Dex swaps involves either usdc or usdt um we rely on them as defi collateral they're are core part of dowo and protocol treasuries so they're they're pretty important to the ecosystem and the fact that a duopoly right now is in control of this infrastructure is dangerous for a couple reasons so the first reason is that if you have a Dooly controlling this infrastructure it gives you single points of failure I think this is what we got a preview of when usdc briefly Deb backed last year uh when that happened quite quickly uh Dex liquidity evaporated for a lot of tokens on curve and Unis swap um and that interaction and that and that uh exchange I think is just going to get tighter as things go on but I also think that as Regulators see more of these use cases that they see that there's value and utility around them that it's not just pump and dump schemes and you know terrorist financing and things like that that they will start to um engage on the Utility side as much as they will on the control side so I think that we're coming up on time um why I am taking away that um from this that that the regulatory side is is is at least something that you all are curious about um that additional protocols or something that you'd like to see us uh pursue uh and across a wide variety of of of protocols um that you are interested in the direct Integrations of with daps and and and defi um rather than through some of these other other agencies and that you know hopefully you will engage with us uh as we go to help uh craft a stable coin that's really going to work for all of you please uh take a look at the faucet at f.p taos.com please send us any uh um any other suggestions or thoughts that we have we really want to be here with you uh and we really want to be building this with you to make it uh the stable coin of choice for payments in your applications and please do take a beanie because it's cold outside thank you very much have a great rest of your [Applause] show did you oh I guess yeah came off right now what are you working on a break right so that's like a very very hard then yeah I know do we have two or is it just one should have it probably is this second one this is move out of the way oh yeah are you guys the cards that's right yeah yeah oh yeah um the defet sure yeah I mean hello everyone table coin diversity Workshop starting in a little bit if you would also like to break the stable coin duopoly grab a seat and wait a couple minutes you here for the workshop yeah awesome we're uh waiting for permission to start I think but should be couple what's up guys I'm ryce meet you what is it har harm nice to meet you too yesper yeser nice to meet you nice to meet you of your project thank you so much yeah I see someone from Reserve in the back come have a seat if you want to talk about stable coin diversity in a couple minutes okay how was nevan's talk I've heard it before yeah that's right yeah yeah it's a shame uh I wanted to be there but this coincided calls doy calls but uh I am curious about his IDE because regulations are [ __ ] [Laughter] annoying okay we're going to start the workshop in a minute or two so how'd you learn about uh about us I don't remember I've been aware of it for where B dollar for a bit but in the network somehow right yeah sorry I can't give you a better answer to that no no problem yeah you be just wearing mer yeah yeah I'm the beam so I guess the meta The Meta project is Eco and we built beam as part of it oh right yeah yeah I was already like how do I know that name yeah yeah interesting what are you doing co-founder of it so whatever is required basically yeah nominally Co of the project but you guys yeah whatever totally whatever whatever we need to do um I I recently changed from C to CEO and my job didn't change like to still just do whatever we need to do it's like when you're young enough they're kind of made up times for a while except for CEO that that has a particular set of responsibilities but within that it's like the yin and yang of co-founders the main thing that changed for me was I'm a little bit more worried about regulations talk about that I was a lawyer in a former life oh that's 10 years ago now okay Dev a Dev and then a lawyer and then back to a Dev turned project so I had a I had like a season of legal practice turns out that is am yeah what I'm doing right now is the first thing I've make sense all right let's get started thank you everyone for being here um my name is Jasper drens I am the CEO and co-founder of glow dollar and here is Karm lucasa CTO and co-founder of glow dollar uh but today we're actually not here to talk about glow dollar we're here to talk about and discuss with you and collaborate on stable coin diversity and fixing ethereum's single points of failure so what's the problem here well the problem is that right now usdt and usdc comprise 96% of centralized stable coins and that means that we're basically trusting chw companies to control pretty much all centralized stables and centralized stable coins have grown to become critical ethereum uh infrastructure so they facilitate Dex liquidity we did some research right now 43% of all Dex swaps involves either usdc or usdt um we rely on them as defi collateral they are core part of Dao and prodical treasuries so they're they're pretty important to the ecosystem and the fact that a duopoly right now is in control of this infrastructure is dangerous for a couple reasons so the first reason is that if you have a duopoly controlling this infrastructure it gives you single points of failure I think this is what we got a preview of when usdc briefly de backed last year uh when that happened quite quickly uh Dex liquidity evaporated for a lot of tokens on curve and Unis Swap and other tokens like d FX and LUSD also de backed so this one tokens failure had a lot of Downstream effect um but also a duopoly can get lazy lazy or greedy because um you basically have two companies that uh can get complacent because they have a lot of power so we already see this a little bit tedar last year made 8% apy on their reserves which is Way Beyond the risk free rate and you know they're being intransparent about how that exactly works and when Circle deack we found out that their reserves are not spread across um enough Banks or at least they weren't at the time and they also weren't in transparent about that so um that's the stuff you can get away with if you are dapoli and lastly and most fundamentally a dapoli breaks sensorship resistance ethereum's last line of defense against censorship is doing a hard Fork but right now if that would happen these two companies would basically pick the winning Fork because their stable coins would lose their value and the other so if you want to sensory ethereum right now you have to pressure two companies and um that's not very robust so basically these two tokens they're too big to fail and this is a systemic risk so let's try to get to a more healthy situation than this one so what do we need to do well roughly there's two directions we can solve this right now we depend on two companies one thing that we can do is to say well let's depend on more companies let's spread out risk so um uh two uh are not too powerful because there's many and the other solution would be to say no let's shy away from depending on companies altogether let's start using more decentralized Alternatives um and protocols like maker reserve and gyroscope that either prevent this by using onchain collateral or by adding like a risk management layer uh on top of company dependence and I think it's good to realize that these are not mutually exclusive we can pursue both paths and we probably need to because right now demand for centralized stable coins absolutely drives demand for decentralized Alternatives and I think this could change with education and with tech progress this can shift the question is by how much maybe it can shift maybe it will shift a little maybe it will shift a lot um but I think it's very impossible that we'll ever entirely get rid of centralized stable coins um for the very reason for instance that I could see my dad trusting a centralized stable coin because it's very easy to explain how that works um I couldn't see my dad anytime soon trusting what's on the right here which is one part of how maker uh Works um so I think that whatever the possible world is that we'll find ourselves in in the future uh it's going to contain centralized stable coins and in all of these possible worlds it would be better if that's not a duopoly But A diversity um so basically we should pursue both of these solution directions and today we're here to talk about uh the stable coin diversity one um so we need stable coin diversity let's quickly Define what we want to achieve what is the goal State and let's keep it simple for now we can discuss the parameters here but let's say that we want to get to a situation where we have more than 10 omnipresent stable coins and these are basically the large very liquid stable coins that are everywhere you want them to be they're on every uh exchange they're on every protocol they're on every chain they're on every DB um right now I think only two tokens mean that definition and we want many more um as a bonus we would want them to be spread out across um multiple um regulatory environments um and so that's not really about market share but let's as a proxy say if a stable coin has more than 5% Market charts probably omnipresent so let's get to 10 or more stable coins that meet that definition because if we do then we live in a world where one failure breaks far fewer things we live in a world where if one stable coin fails is going to be very easy to migrate to an alternative it's going to be much harder to censor ethereum and because the cost of switching for user is very low um there's going to be more healthy competition among stable coins and that's that's what we want okay so let's do this um how are we going to actually um make progress here well we can take inspiration from how the community has made progress on the problem of client diversity um I don't think we're quite there yet but uh the community was able to make a lot of noise recently um through you know education um memes uh pressuring large actors to do this um and um yeah that actually worked to quite an extent so let's take inspiration let's start a movement let's raise awareness of the problem let's make diversification cool let's apply peer pressure to large actors and we can actually start doing that today uh we brought some tools for you to use so one is we launch the website stablecoin diversity. org that you can share with people to educate them on the problem and solution directions um we also um this morning posted uh two threats that basically summarize the problem statement that I just shared with you so if you agree um you can go to K's account on forecaster which is Karm GM or on X which is at harr.com and you can retweet that but also since we're here in a physical presence of one another we also brought uh cards and um they're here on uh the seats but we also brought a whole bunch of them here on the right we really have plenty so please if you want to spread the world the word uh take a couple of these cards and uh spread them around uh for the rest of this week um so um that's something we can we can start doing today um but the question is what do we want people to do actionably what's our what's our seat PTA for people that we reach um well in the basis of course we want people to start using minority stable coins but I think if we keep it to just that we're going to run into some issues because we have to deal with couple coordination problems um so we can get a little bit more smarter with what we spread um as a CTA and um these coordination problems basically stem from the problem that Minority stable coins are inferior stable coins until many more people use them because you know by default you prefer stable coins that are well-known trusted liquid widely available integrated etc etc and based on these criteria the reality is that right now usdt and usdc win among centralized stable coins so if we start asking people use minority stable coins we can anticipate three common concerns the first is people are going to say what's in it for me why would I do that the second is sure but I'll wait until they have more adoption basically until others do it um and the third would be okay I'd love to but it's not on my dap protocol chain off offramp so I can't yet or it's not liquid enough and um let's let's tackle each of these coordination problems so the first is what's in it for me that obviously stems from the issue that most people act in their own self-interest so even if they agree with the campaign they might not care that much about the greater good and um um that's going to be especially true if we want people to switch to carbon copies of USD and usdc the issue for them is that they are strictly functionally inferior in the sense that they offer no other features than usdc or USD do but they do it in a less liquid less widely available way so if we ask people to switch to dest stable coins this campaign is going to be an uphill battle uh however there's a new breed of centralized stable coins that offer you an unique feature and because of that um they have an easier way to attracting new users because there might be cases where they're already sometimes someone's best choice um so for instance usdm is yield bearing uh USD Fe incentivizes distribution although I heard from Matthew's talk this morning that we might have mischaracterized them as centralized but you know that's a topic for discussion I guess uh and glow dollar is a stable coin that lets you fund public goods um so let's update our CTA uh to make it more effective let's start asking people to start using minority stable coins with a unique competitive path because it will make this adventure easier on us second problem is some folks will say sure but I'll wait a little bit until they have more adoption because no one wants to be the first mover here let's say there's a minority stable coin called new USD and there is obviously the duopoly then um the status quo is that no one is using new USD um what we want to have is that a um uh critical mass is using new USD so let's let's say three um and uh by that uh we would have you know more stable crin diversity problem is that no one wants to be the first mover because the first one to do this uses stable coin that sucks comparatively until the rest follows suits so the first mover has um uh more risk here so how can we solve this well um choosing a stable coin is not necessarily binary if you are Dow with a large treasury you can actually start diversifying a little bit so this is something that uh it's it's not binary Choice it's more like a slider so this is something that gitcoin did they are using millions of UCC in their treasury recently they swapped 100K to Glow dollar um so they made a tiny step in the direction of diversification and what we can do collectively is something that I would call Collective gradual diversification where basically one actor um takes the first move starts diversifying a little bit this sends a signal to the other actors that they could follow suit so they also diversify a little bit and now the first actor sort of like emboldened to take the next step and if we rinse and repeat this then we'll have a new omnipresence table and no single actor really took any outsized risk during this process so it's like a smoother process um so let's update our call to action again let's say start using minority stable coins with a unique competitive path and diversify gradually and then the last problem is that even if people want to use minority stable coins they will run into the issue that is not on their preferred chain or dab or whatever or it's not liquid enough and that comes from the fact that new stable coins face not one but sort of like three chicken or NE problems at the same time um so the first one is if you're a stable coin with no adoption then you have this fishes Loop where no one is using you because no one is using you no one knows you and because no one knows you no one will use you so that's one thing that you'll have to bootstrap the other problem is that you're not integrated on the daps on the change on the protocols on the exchanges and Builders have no reason to start supporting your stable coin because no one is asking for it so you won't get any Integrations but if you have no Integrations no one will start using you so that's this other thing that you'll need to bootstrap and then the third thing is liquidity if there's no liquidity users will not use you if there's no demand from users uh there's little LP yield to be made so LP uh LPS won't provide liquidity and that's a third thing that you have to bootstrap obviously for usdt and usdc it's inverted they have this all established already uh in fact this is what comprises their Network effect um and um minority stable coins will need a little push on all of these fronts so I think for the first Loop we sort of like got that covered if we get enough people to diversify gradually we can bootstrap adoption like that um for the Integrations what we want to ask is for Builders to support minority stable coins preemptively so basically before users ask for it because that's a way to break that chicken NE problem and then for bootstrapping liquidity um what we want is some LP to start providing liquidity even before there's a lot of yield to be made um we could call that that we want them to LP charitably and if we get enough Builders and LPS and users to take Tiny Steps in the right direction um we can uh we can lift these minority stable coins out of their uh chicken and Ne problems so the final call to action that I would propose we're going to discuss that uh in a minute is hey crypto world let's start using minority stable coins with a unique competitive path and we recommend to diversify gradually support preemptively and um LP charitably okay that's the monologue part of this Workshop um now ont the actual Workshop thanks jper and uh we're very curious about your thoughts about all of this as well and um yeah we basically would just want to open it up to the audience and ask you for input on two big questions like what do you see as the top challenges to improve stable coin diversity and how can you as an individual or as an organization help the stable coin diversity movement so basically we're starting a telegram Group which is called the stable coin diversity um crisis crew and we'd love to have you join that and sort of share how you can um contribute to that cause uh but first I'd like to open it up to you just here on the floor um and hear what you think about these two questions I think the group is small enough that we can just do it interactively so if you have thoughts on one or both of these questions love to hear it sure Nevan uh I'm not sure if we have another mic that actually works this one just give you so uh for the client diversity um on ethereum like sort of going sort of viral and and people paying attention to it it seems like crucial to that was people really feeling viscerally that oh [ __ ] there might be a real threat here um and so the case that you made about uh you know ethereum would be censorable if you know only these two companies were pressured I think it's I I'm interested in like digging into that and seeing like is that a real threat like could that actually happen and and how specifically would it happen you know or or are we just arguing that it could happen and so we should like you know reduce tail risk because if you dig in and you find some sort of real credible threat um that you can then present and like the intellectuals in the space will all be like holy [ __ ] I'm actually feeling viscerally worried about that then they're going to retweet the thing then they're going to talk about it publicly and that could be a vehicle for getting people to to take this seriously but if you dig in and you're like H you know like yes in theory this could happen but we can't really come up with any like concrete argument for why it would get censored that way or whatever then like well maybe it's fine maybe we don't have a stable coin diversity problem right so I I I feel like that's the heart of the matter and and if you can like prove that in more detail that could really like cause the thing to actually be seen uh by many more people because the smart people with a lot of followers will will talk about it so I'm curious how much you've thought through like have you already gone that deeply and do you feel like that threat like because there's a particular scenario you're imagining or have you not maybe made it quite that deep yet I I don't think we have gone that deep yet unless you have um I think um I think he just turned it on so it should work um so that's a that's a great point and something we definitely need to do a lot more research on um I I know it's something that vitalic is also flaged like two years ago uh but it it's never really picked up as much as it should have um yeah maybe yeah I think I think a good question is when when like what do we want to see before it starts from like we all know it's mechanically possible I think so the question is what's the probability that I guess a government agency takes the step in actually doing it um I think the the most common um scenario that people are speculating about is that um at some point perhaps the some government wants to push through like ofac compliance um so basically um um when it happens that um uh you know stakers are too centralized in you know party like coinbase um the government could use that as a pressure point and then ethereum's resistance to that would be hard forking um and that should work if not for the fact that you know we have these two stable coins that then lose their value on the other Fork um I think it's a very good question like to what extent is that going to happen um Circle has been pressured to sanction and censor um tornado cach related adverse of course I think that's the only situation that sort of like it actually happened um but yeah I I agree um yeah can I can I can I add to that yeah definitely it's not a the it's not like a a theoretical like what could happen like it's this has been like uh uh like War roomed out and like what what would uh like what would the implications of this be and like simulated simulations have been done on this and it has it has not been in the public eye because the meme wasn't as good uh but now I think actually like uh taking like client diversity Meme and turning that into stable coin diversity meme I think that's really like really smart going to catch on for sure uh but yeah if if the hard Fork if the the Dow hack for example if the Dow head hack had happened a year later which it just just as easy could have right where 30% of all the eth was was you know stuck inside of this contract uh and and a hard Fork had to be you know happened to to fix it uh circle gets to pick which ethereum is the real ethereum they get to pick because every lending all of D is backed you know majority backed by usdc a like everything collapses doesn't work and the people deciding controlling the validators Lio you know the people deciding which Fork is the real Fork uh are going to go along with whatever Circle says because they don't want to lose their entire livelihoods and everything that we've spent a decade building up right so circle gets to decide what what ethereum hard Forks are the are the correct ones uh which means that they can decide what to put into the hard Fork that's it like that's that should be hugely terrifying uh to everybody who cares about um uh you know neutrality I'm I'm terrified of that so uh let's vampire attack Circle thanks I know we don't have time for a whole war game right now but let's say there were 10 okay there's 10 and if a hard Fork's happening then what yeah so I think to the best situation would be that it's not than in the US but it's 10 or more spread across multiple regulatory environments and ideally also per environment one and then a backup or something and then you can have competition between regulatory environments even though the US would probably still be pretty dominant um right but with the general scenario of there's a hard fork for some extrinsic reason and then well right I mean even if you know it's like even if they're not that coordinated even if there's no government trying to push them One Direction or another there's going to end up having to be a consensus formed you're right RIS yeah so there's a couple of points that I kind of wanted to bring up in regards to like why the push I think took place on uh ethereum in regards to the validators versus the push on the stable coin side side and I think some of this was driven by Gary Gensler and the SEC going oh now that staking is Consolidated with Lio and coinbase now there's a way for us to show that we as the US government has power to start to enforce things and I think that was kind of that existential threat that ended up pushing a lot of people to realize that this is a potential attack Vector because a threat was realized the one issue that I see with like moving from stable coins let's say from tether and circle to all these other parties is the backend problem which is you need a banking system in order to be able to allow for you to hold dollars so unless you move to something that's more synthetic or crypto collateralized which I feel like a lot less people trust and the dollar backed ones that end problem is still going to sit there and still going to exist and one of the things is like I do see that there's an issue with the centralization with usdc more so with usdt uh because they're not as regulated or fully backed quote unquote as some of the more regulat ones but the issue that I kind of see with a lot of this or not issue that I see with a lot of this is when the bank banks in the US were failing at the uh beginning of last year right like my money in my bank account was actually less safe than my cash sitting uh in a stable coin because like if you look at like the largest outflows of capital that have taken place I think it was like $40 billion from svb or something like that over the course of8 hours well the funny part is like if you look at the top 10 list I mean they don't include tether or circles redemptions but like there was an8 billion outflow out of uh Circle there was like I think 11 million outflow out of tether they had no problem um actually issuing out and redeeming all of those funds so like I actually feel like the way in which quasi regulation has been set up for stable coins has actually made that a much safer spot to keep your cash and so like from a diversification perspective I feel like if there's a good enough alternative in the crypto space that people can get comfortable around I can see that working but like a lot of the stable coin use cases now like they're trying to bridge let's say traditional finance and uh let's say crypto Finance where you can actually use stable coins for real world assets and I feel like with a lot of the crypto collateralized stuff it's very difficult to move from the crypto world to the real world so I feel like unless there's some kind of additional yield or additional value proposition for some of these tokens it's going to be very hard to push people over and just for like from a contextual perspective so like we work uh in the cardano ecosystem for one of the founding entities and we've been trying to get a stable coin into our ecosystem for a really long time so 10 years ago I worked at Pax house helping them get the trust Charter and everything set up and we were trying to replicate something similar but going to companies like usdc and trying to get them to come over it was like a $10 million Initiation fee for them to make money off the yields from our own ecosystem like I don't pay my Uber driver to go to his house so it's like it didn't make sense for us and when we were trying to get all of this set up as well like in our ecosystem we don't have a freeze and seiz functionality like the erc20 proxy contracts and so a lot of these traditional players are not willing to play in our space because like the DFS at least in New York when we were setting up a usdp back at PCOS they would not allow for us to issue a stable coin unless that functionality was built in so you kind of like have to deal with this weird thing it's like crypto was built for one thing like tokenization of real world assets and let's say you're interacting with normal Financial systems in another manner like you have to like change around a lot of the underlying blockchain in order to be able to fit it into the real world and uh I'm like is that even a viable route for us to be running down in crypto or how do you make it work where you don't lose literally the entire purpose of crypto which is the decentralized element but that kind of just my my two cents okay so we got we got time for um one more question I think yeah statement um I think what would would also be interesting is um to hear from anyone here an idea to make like progress on this so um we plan on hosting a similar kind of workshop at ECC in not Paris but Brussels um and uh perhaps we want to make this a continuous thing at stable Summits um so what would be something that someone in the audience here could do just a small step um to when we meet again in Brussel say hey we made actually a little bit of progress here there's this large Dow now that Diversified a little bit um we spread awareness now everyone understands this meme um something in that direction you want a [Laughter] mic right I think uh that's it let's uh let's oh I don't know about a meme but you know one mechanistic thing you could do is essentially vampire attack the stable coins right by uh having some sort of additional uh layer on top that you know is holding the stable coins and then over time sort of everyone is agreeing through governance to collectively switch to a new distribution um so you could imagine something like that it's not a meme but you know it's a more mechanistic way of doing that yeah I like it it's probably better than a meme or maybe it needs to collaborate with a [Laughter] meme right um thank you all um be sure to uh grab a bunch of cards there and um distribute them on uh the bathrooms for instance that uh you attend to you over the next couple days yeah and join the telegram group if you uh if you like thanks so much