DAPPCON 2025: Building Onchain Payment Infrastruture That Serves Europe - Gísli Kristjánsson

Transcript

Does this work? Is it back? Hello Don. Hello Berlin. When I watch over the audience here, I see a room full of builders and founders. And I think I can honestly say that we share the same enthusiasm for building the next generation of fintech applications. and change the world while we're at it, right? So, I bring good news. I think you know at least when the st from the stable coin market things are really accelerating with new entrance like stripe with the acquisition of bridge and it really seems like things are

going to happen. Uh I've been coming here for the past few years as the CTO of Monarium mostly talking about the products that we've had the integrations and some of the partners that we have in this very audience. Uh but there are also been some internal changes with within Monarium. So we the founders uh so our ex CEO who's here in the audience is now the chair of the board and I have superseded as the CEO. So when creating this presentation, I put the CEO hat on and created, I think, a very good presentation. It all had all the hype in it. It had the graphs that went to the

right and up. Uh I was pretty proud of it. Then I threw it away because today I'm not going to stand on stage pretending I have all the answers. But I would like to take the opportunity to share with you, you know, some of the behind thescenes uh stories, uh some of the challenges that we faced, some of the decisions that we've made along the way. Um and so it's kind of a building the onchain payment infrastructure uh that serves Europe, lessons from the trenches. So let's dive into it.

So it's obvious for us as European founders that we face one challenge. The onchain economy is mostly and overwhelmingly denominated in dollar tokens. So I guess many of you can relate to this. We may have uh funded the company in euros. Uh we hire and we pay salaries in euros. But when it actually comes to managing the corporate treasury, this means that we need to swap into dollar stable coins uh incurring fees and then back again on the way out to actually make the salary payments and along the way we bear the risk of FX uh FX rates moving to our disadvantage.

So it's it's it's like it's manageable, but as founders we should not really be wasting brain cycles on those things. So the obvious answer seems to be, hey, let's create a Euro stable coin. But it's actually more than just a stable coin because if we think about all the stable coins out there, they were not invented to solve the treasury function of a company and make payments. I mean, they were a solution for crypto traders and speculations speculators to actually exit the market at volatile times. be able to survive crypto winter uh and move between exchanges without touching

bank accounts. And for that dollar denominated stable coins were actually a perfect solution. So for euro stable coin to be valuable we also have to solve what we call the last mile problem which is actually connecting the banking system with blockchain somehow. actually moving funds from bank accounts on chain and hopefully be able to do it in the other way as well. So when we started Monarium many years ago uh stable coins were emerging as a category and like then like now we had broadly three token designs available.

These would be your fiatbacked stable coins where every token in existence would have the equivalent in a bank account. boring, right? Uh then you'd have the cryptobacked stable coins which effectively tried to do the same but instead of fiat in bank accounts, you would have overcolateralized cryptocurrency as the backing back stop. And then the third component or the third design would be your algorithmic stable coins. Now many of these more exotic designs have or at least some of them have succeeded but many of them have failed quite miserably. And here on the graph you can see the Terral Luna uh graph which used to be one for a very

long time and then suddenly a black swin moment and it went to zero. And if you actually shift this X time series a little bit to the left, this could have been the Icelandic banks where I come from a few years earlier where they all fell overnight. So for us, we also understood that if this were to become a mainstream thing, stable coins, uh you know, money is inherently political. So it doesn't matter if money is moving on crypto rails or some other rails, they would always be regulated. So the design decision was kind of made easy for us.

We wanted to build a euro stable coin that was boring but efficient. So we started working. We hired the first employee, Yonkunar, who is our in-house lawyer somewhere in the room and we started to work. 600 pages later, the application was ready. Uh we had designed a company with all the right procedures, contingency plans and the whole nine yards. Um so so next the next challenge was actually to figure out how how do we get the money from the banking system on chain at the time some of the more reputable

exchanges were able to open up bank accounts denominated in US dollars because that was used for trading. So this wouldn't necessarily have helped Monarium in any significant way. So, and this also didn't align with the vision that we had. So, what we were building was something different. It was something that should be modular and embeddible into the fintech products of the future. And none of that existed for the on-ramping through exchanges. We quickly discovered one very simple solution. So, how about we take the IBAN, which is the the way you used to um route payments in Europe, and we

associated it with a blockchain address, effectively creating a virtual bank account on top of your wallet. We thought this was brilliant. Um, and this became a very, very, very efficient way to move money across the boundaries and solving the last mile problem. And a little peak insight here, this became so effective that we got on the radars of scammers who knew nothing about crypto or DeFi, but would be using our infrastructure to make to be scamming people. So for those of you who remember when we instated invite codes, that was actually us trying to weed out the scammers. Effectively, if we found one on there, we could trace the lineage in the tree and get rid of them all all at

once. This was a painful lesson that we learned. Now today uh since we launched publicly 3 years ago our users have transacted the URI over 4.7 billion worth of of transactions and 1.5 billion of those uh transactions have actually been moving across this sea bridge and 80 to 90% of the volume has actually happened in the last 12 months. So it's growing like crazy. Um the next lesson actually came from integrating uh Euro stable coin into DeFi. So if you're a regular D5 project,

many of you around here have probably used the method of allocating some portion of the tokens to yourselves or to the treasury. You can use those tokens to you know incentivize behavior, seed the liquidity pools. you know, life is good. We had kind of imposed a constraint on ourselves with having every single token backed by a euro somewhere, right? So, we couldn't just pre-mine euros. They had to really exist. And for a small team with a relatively small balance sheet, we couldn't just buy our way into the market. That's not the way we could solve it. So the only possible way we could think of was to reach out to

like-minded people and convince them to rally the troopers. And after a few failed attempts uh on few different chains, we actually found a community a home in this very room. And I think it's good to kind of shout out uh some of them, but there are many more. I mean Nosis, KPK, A and and a lot of others have really helped out on this journey. One of the key key unlock was actually to get those founders of those projects to on board for their personal account.

And once they actually had tried it, you know, receiving their salaries and making payments to their landlords, there was sort of an aha moment where, you know, they would become monarium missionaries overnight and could become these robots that would just move mountains to to make sure that, you know, enough liquidity existed so that they could themselves do the things that they wanted. So the next lesson was it seemed like once you have a stable coin, you have the IP band for easy top up and enough liquidity in DeFi. That proved to be a great foundation to serve uh to disrupt card payments.

So uh Nosis Pay was here on stage before me. So you know all about that and now uh MetaMask as well. And this second generation of cart cards, they actually work a little bit differently. So they allow you to hold your stable coins in a self-custodial wallet and then at the time of sale or point of sale, they will actually uh make the the tokens available for settlement. Um just to be absolutely clear about where we are in this journey, if you think about the value chain of of payments, it's effectively the issuing bank, the settlement network like Visa and Mastercard and the merchant bank.

And today the way it works is the issuing bank is using stable coin rails then redeeming that and settling over fiat rails. We are actively working uh with Visa and Mastercard to get our stable coins approved as settlement tokens kind of unlocking the next layer in the value chain. But the real unlock will come from when stable coins will move from the card holder directly to the uh merchant and none of the other thing is needed.

I actually think that we are just at the beginning of what is possible uh with this technology. I get really excited about the ability to hold yieldbearing stable coins in a because of the atomic nature of blockchains they will be able to unwrap the tokens uh at the point of sale to make them available for settlement. And conversely for credit card kind of behavior, we can think about a future where uh a loan you'll use your crypto collateral to take out a loan at the point of sale which then gets like used for for for settlement.

So I think there's there are great things uh happening on this front. Our vision was always to go to market through our partners as I mentioned earlier and we spent many years trying to convince the crypto wallets of the time to embed our solution to unlock the functionality that I'm showing here. uh we failed. Most of these uh first generation of crypto wallets would you know either be crypto only some of them were kind of integrating with DeFi and a handful of them would be trying to onboard and uh on ramp and off-ramp maybe through the card system which

would you know be very very expensive 1 2 3 4 5% in some cases but for the use case at hand it didn't really matter because crypto prices of crypto swing like crazy and it was all worth So it wasn't until recently that we started to see a new kind of wallet that is more tailored to normies. Uh these wallets would effectively try to focus on simplifying the uh the management of the private keys. They would swap out words like exchange or cryp trade uh yield for something more simple like savings accounts and payments. And it's fantastic to see some of those uh wallets out here. The battery wallet,

Rebind Seal, there's now also Green Hood wallet that are that are integrating many of the components that you've heard about. You know, you will you will be able to import your Nosis Pay card into those wallets. You will have integration into the IP bands making the the payments very easy and then savings accounts that orig that get their yield from from a great many things happening here and I was really proud yesterday when I saw a partner of ours uh tokenize it who are creating an legalized or legal investment platform kind of a legal ICO

for Europe. where they showcased in real time how they could effectively have uh an investment happening where the investor would kind of move money to their personal iPad that we provide and they would make the whole investment uh process happen in just a few seconds. It was fantastic. It fills me with pride. And I'm also happy to share with you that through those partners, we are now onboarding more users every day than we are ourselves. So it seems like at least partially our go-to market strategy is starting to work.

So did we make any mistakes along the way? Yes, you betcha. Many of them. Is our goto market strategy going through partners the best way to do it as opposed to all the other stable coins who go through central exchanges? Well, only time will tell. I can't tell you the answer to that. But what I can tell you is that the stable coin market has been disrupted in a very significant way and I think it's going to lift all the boats in the stable coin market and also in some of the other D5 protocols that will become mainstream as a subse subsequent uh matter.

Uh I now hear again the story that it's only going to be USD dollar stable coins that will matter. uh it's all about being able to exchange a local fiat currency into a dollar stable coin and then use that to transmit over the world and then back to local stable coins. I just simply cannot subscribe to this idea for two reasons. Number one, I think there will be regulatory push backs as we mentioned money is inherently political. And number two, we are all here on the mission to bring the world's economy on chain. And for that to work, we need more currencies, not fewer and especially not one. Right? So, uh, and in that world, we'll need to be

able to efficiently exchange between those tokens. So, earlier this year, we got our vast registration because we're preparing for the next era of the company where we are going to facilitate users uh, sending us USDC or crypto and be able to mint Yuri against it. We think you know this will solve some of the liquidity requirements for some of the changes where we haven't had as much sex success sorry as the other uh as as Nosis chain. Uh and also it's going to support uh DeFi in a way where now rebalancers uh that rebalance the pools will be able to go for uh trade against monium and create bots that trade

against the pools in a doing it in a very efficient manner. The end result is a world where you can go from one currency to the other. This is what we call the onchain FX and we'll be able to do it at close to midmarket FX rates in a similar manner where we bring the liquidity from the FX markets uh like we did with the SEPA connection. So with that uh after having shared some of the stories and insights I hope I was able to inspire some of you. Uh the only last remaining advice I have for the audience here is uh I mean we've been at it for a long time right in crypto years

we're probably something like 100 years old and we definitely have the battle scars to prove it. Uh I think it's all about you know finding the right people to to uh to who share the vision with you and who are in it for the long haul. Uh with the right people and the right partner I believe anything is possible and we eventually will change the world. So with that thank you for your time. Thank you, Gizley. Um, time for questions. We have basically just one question. Time for one question. Do Oh,

okay. Yeah. Thanks. Thanks, Ky. Um, my question is what is your mode against other fiatbacked stable coins? Um, that is a good question. So I think the network effects will be one of them and again to the point earlier like what is going to be the the the right way to distribute the tokens like is it going to be through some of the centralized exchanges we see that you know some of them have had very much success but we also see that you know they're paying a lot for that distribution channel right so uh we already know that you know USDC is has been paying something up to up to 90% of their revenue to coin base for

that distribution. And this aligns with the conversations we've had with the exchanges. So, I'm not ruling them out. Uh I'm just saying like I I'm not sure it's a great business to be in. uh and we always had the vision of kind of creating this modular uh effect that I talked about and I think having you know many integrations different kind of integrations that are more to tailored towards uh real world users because let's be honest the ones in here it's just tip of the iceberg right what I'm talking about is the rest of the world and so we are very focused on on being able to serve this use cases like Nosis

Pay and others that are that are on that same mission. I hope that answers the question, but it's an inherently tough one. I don't know the exact answer. Cool. Thank you so much, Gizley. Thank you, [Applause]