Make Stablecoins Great Again: How Money Moves in an Open Economy

Transcript

Hello everyone. Uh uh nice to meet you. I'm Raza uh head of growth at scroll. Uh and today I want to briefly talk about you know how money moves in an open economy. Uh scroll is a layer 2 zk rollup uh and uh we have a heavy focus on the global south. uh and where you might have been listening today about you know different type of stable coins have been rising yield bearing stable coins you've been seeing defi protocols that are utilizing these uh we're very much like at the forefront of what uh stable coins do either in enabling or in terms of payments um and so uh diving into it you know these are probably stats that you've seen before uh stable coins have been taken off uh I just saw the slide the talk of a slide before this um I think we are almost at $250

billion market cap Um uh and and the Genius Act recently passed which is a huge event um which essentially for a charter of stable coins um uh USD pack stable coins will be treated as a dollar um we see a massive distribution and a massive growth um and and essentially it means that the railways are here the assets are here uh and today what I want to show you is is um you know what in the scroll ecosystem how it's being utilized almost outside of the crypto bubble um and so uh you know these are this is bas essentially our vision um you know we want to make sure that we facilitate uh u people functioning in an open economy uh and that essentially means um they're

not being restricted by either not having the railways available or not the assets available um uh and and that you know is at the center of it um you know you could argue whether it is good or bad everything is very uh dollar ccentric um it is it is a fact of life and uh uh it is unfortunately uh or fun depending on your view um uh the reality that we live in. Uh but most of the crossber payment or even uh uh uh strategies that individuals adopt um are dollar ccentric um and then there are the most efficient ways and easiest for stable coins to plug in. Um and so what is our role in the open economy? Uh I want to highlight three examples today.

they actually operate for different target audiences and they have different use cases. Uh the first one the first one is Wi-Fi uh virtual finance essentially think FX onchain um uh and you've heard it before. This is uh almost I would say nothing new even though the design under the hood is novel but you heard it before. Oh you know um uh a local Nigerian naira or local Kenyan shilling compell colombian peso uh inflation hits these certain regions but what does it exactly mean but and how do you get it exactly off the ground? Uh I mean shout out to Cello did a lot of work on the continent on African continent and I think that that was that was great but still you see like when it comes to mass adoption or ease or access to these uh to the

financial um railways and there's still a lot of friction. I recently went to Nigeria uh Lagos and and to Kenya Nairobi and uh and I wish I went earlier because it's really when you're on the ground there you understand oh they're dealing with six seven ODC providers they're they they have a lot of like on-ra offering solutions that each like some have KYC some don't some are not always available there's actually a huge off-chain uh dollar liquidity uh issue um and so essentially what VIFI does is is it allows to onramp offramp um uh in local stable coins uh and it allows capital to move more efficient i.e. So just a practical example, if you are a

Keny do business in Kenya uh and you need to have a partner let's say in mainland China or Hong Kong, you actually don't uh you actually use the dollar as a facilitator to swap between currencies and sometimes it goes through like multiple banks. Um and so this causes a time delay usually a week before the money arrives left to right. There are a lot of fees involved. This is we're not talking about one or 2%. This is obviously sometimes double digit percentages. Um and also change of hand in currencies that are are most more often unwanted. Um and so what this does is is essentially um allows a more efficient uh uh swapping mechanism or or route. So think Kenyon shilling directly

to uh Hong Kong stablecoin dollar or R&B. So the Chinese yuan um and then you don't need to like go through the dollar. Also, it means that you hold enough of the currency that you need or want. It's not just getting too much exposure, too much exposure. Sometimes it's also having too little. And what does that mean? If I have uh Nigerian naira and I need to pay the bill, but I don't have enough. It means that I need to go by swap whatever dollars I have for Nigerian naira at a good or or worse rate, but I have to go through the entire process again. So, um and by the way, I don't think that these this is a new use case. But what is new or different is people doing the hard work.

So VIFI is Tony uh and and Verun uh uh on the ground. They talk to the local OTC desk do all these integrations. They talk to the banks, Australian banks that investment bank and then they talk to the folks on the other side as well being like hey you know we got this platform you can you can you can be onboarded making sure that liquidity is there but also folks have on-ramp off solutions the KYC KYB KYT are are there. So really doing the boring work almost so that you have end to- end flows. Uh and it can scale. Um and and this is stable coins are at the heart of it. Um most noteworthy uh USDT um project mocka. I love talking about project mocka because it sounds like a hackathon project and it's everything but a

hackathon project. Uh you've seen this in 2022. You know people talking about oh we're going to you know uh you have had fractionalized uh NFTs that that did u for for for real estate. you had um people saying, "Oh, we're going to tokenize like all sorts of things." These guys are actually non-crypto people completely outside of the industry. They come from a long lineage of farmers and they they were desperate of finding a new way to get into to find uh solutions for funding. And so they're going about the right way. Essentially, what they've built the tech is actually a small part of it. they're uh so the the the Kenyon coffee bean uh uh industry uh believe it or not is

shrinking year-over-year. Uh and that's because the farmers are like pushed out. Margins are very very bad. Uh and essentially I won't go into the mechanism. Find me if you're interested. They're basically putting everything on chain and tokenizing the assets uh and and the life cycle. And RWA had a huge problem is that RWA was mainly being done like tokenizing gold or whatever by people who don't understand gold. they or or tokenizing assets that they don't understand. They see it more as a way to pump the token and as opposed to like actually helping the industry. This is the reverse. The these guys came to us, they actually like were in the industry and like we don't even know anything about smart contracts. We don't even know anything about like what a DEX is, but we know that this is a venue and so they actually physically sell uh coffee

beans. They whenever they call me, they call from like you know the farms and it looks absolutely amazing and doing the hard work talking to the farmers association and they have partnerships lined up and so um you know they're actually doing six figures in revenue right now. is actually phenomenal and they able to have like profitable margins and so we're backing them um where you know again scroll is completely abstracted way no one knows they're on scroll u and that's how it's supposed to be we're enabling them but stable coins at the at the heart so having all the payment integrations PSP payment service providers integrated OTC integrated you have the on-ramp offramp the POSOS the terminals that where you pay everything end to end and I think this is something that you know in

crypto is always like everything's incrementally better. But um you know having founders like this that think end to end um is really refreshing. Uh and then finally I think this is our biggest client right now on Scroll. Um right now we're I think at 2,000 KYC users um and this is uh you know I think we're only uh alive for for a few weeks or or close to a month. Uh roughly 50 million in TVL but we're going to like double down on this which is Eify cache. Um you know again scroll abstracted away but meant to power these use cases. Um what I love about ETFI cash is is that you know I think the space is maturing where you know at a time and there's still target audience for that that they're like oh I

want 40 50 60% 100% yield and then I'm looking for strategy for that. Folks are actually now uh more or less saying you know 10 or 15 or 20% love it. Um but they want to be more liquid. So if you know if you have a yield bearing stable going today you have to stake it. It means you can't like do anything with it. It has to sit there. uh and often there are more incentive in incentives to like make sure that it's sticky and it sticks around let's say in that ecosystem. Um this essentially gives the same user flow where you have a vault you can deposit it there you get yield but you also get a credit card slapped against it. So it basically means you get to spend it when you want. Most stable coin users uh the behavior that that we're seeing want to make sure that

stable coins works for them but in case you want to use them you get to use them. And then um redefining incentives. I think most incentives are geared towards bootstrapping users often in the form of farmers uh or sometimes uh bootstrapping liquidity to get like uh a growth fly going. We've bootstrap incentives here in a more traditional way. So this is not it's almost like I would not position it as a crypto product. It's a credit card and you get incentive. You get cash back period. But the cash back is on chain and the card is onchain and the transactions are onchain and so the but the user experience is very like I think we've been bringing great feedback uh obviously always improvements but it's just it's just an app download on your

phone. It's just like you load it in Apple Pay. It's not like I'm instructing you to load it in a certain No, it's the user behavior you're used to. Uh it's the quality of of payments you're used to. It's just onchain. Um and uh uh yeah very proud at scroll that we're powering this uh uh with our with our with our ZK chain. Obviously security at the and ZK is the bread and butter. Um yeah those are the three uh uh use cases and very different target audiences where we see like actually uh stable coins different kinds of stable coins are actually powering uh what stable coins were meant to do. Um and it's all about purpose. So I think that uh it's a it's a overused word utility, but yeah, doubling down on

utility, doubling down on uh what programmable uh money and finance can do. Um I'm really really excited about it and uh um that's what we're going to be focused on. Um if you don't know, uh together with Stable Summit, we have Stable School. Um we're revamping and rebranding. We started out as an experiment uh at um e Denver um but we're going to be uh scaling it up now and and then there will be a product where we're building a unified dashboard for all things stablecoin. Um if we had circle on a6 we had um u you know dragonfly on the podcast and we basically tap into the bright minds in this industry and ask them hey what do you think or what are you working on?

Um, if you have any questions about anything stable coins or anyone who's building on us, uh, I always say like, you know, I think that escro, we're the boring guys. We're just like look, we're out there, um, and looking for the real use cases because at the end of the day, I think that that's, uh, it's what's going to make a difference. So, feel free to reach out. Um, I was Raza. Thank you very much for listening. [Applause] If someone has questions, we've got time. Okay, thank you.