Endogenous Stable Coins

Transcript

all right good morning my name is ashley taylor i'm here from resource protocol resource network i'm one of the co-founders of resource and today i'm going to be talking about endogenous stable coins which is what we have come up with as a solution for the traditional credit so traditional credit it's very hard to access in many places around the world but also even in developed markets for small businesses getting an interest rate is very difficult if you don't have things like real estate as collateral banks are too comfortable and a lot of the lending solutions that exist require you to pay high interest rates which are just really inaccessible

so we're really thinking about we have this opportunity with blockchain to innovate and change how credit works so in order to do that we can think about not just replicating the old system but looking at other models so one thing that we've found which is very interesting is the vierbank model that emerged during the great depression in switzerland in the 1930s not surprising as switzerland is you know very innovative when it comes to money so uh they figured out that uh when there was a liquidity crisis that basically you could take uh resources and skills that all the businesses had and create a new type of currency today the vr bank still exists it's

responsible for about one percent of the swiss gdp so it's not um not just a small sort of experiment it really has become a staple within the swiss economy and there's thousands of other networks around the world that use this type of model however they're all still centralized and they haven't been brought into the new type of blockchain space that we know of today so this exact this is how these types of currencies uh work how they come into existence so there's a business that we're working with um where we've launched the first uh network using this protocol her name's andrea she owns like a local competitor to an amazon and she has 360 vendors in two different cities in

america she has a delivery service to your home for all types of groceries and things that you might want or need what does she need she needs to give her employees more benefits and she also needs new customers so andrea can get a credit line she gets a credit line in a resource dollar so the resource dollars at this moment don't yet exist she just gets approved for them because she's a credit worthy business she doesn't need collateral but she needs to provide some things that you can use to evaluate her business like her credit score in the u.s or her bank account statements or just her accounting statements she can also she also signs a contract

that basically she will pay back her credit line so andrea then finds three different health and wellness providers that she wants to work with her employees so let's say that she gives them each 200 resource dollars a month so this is actually when the resource dollar is minted so it's minted whenever andrea makes a transaction so she in this month spent 600 resource dollars they went to three different people they all now have 200 resource dollars and andrea has a negative 600 resource dollar balance so that means that andrea pays that back when the health and wellness providers or of

course any other business in the network comes to shop with andrea and then of course you can sort of scale this model and have lots of different businesses participating so we came up with a mutual credit token standard to actually make all of this work we uh we think we're the first negative token balance wallet that exists and so basically businesses can start spending crypto before they have it so it's a type of stable coin that achieves this type of stability from organic market trade more capital efficient than other stable coins out there that exist because you don't need um 100 or even over

collateralization to create it and it's a credit line that you pay back with sales so andrea our business in the last side would she'll get back to zero when other businesses come to buy from her so then the next question is how do you manage the risk of these currencies because how do you determine how much credit line businesses get how do you make sure that they're going to pay it back i see you nodding so we have a whole system of uh onboarding this will of course be it's sort of like the launch of it and can evolve in many different ways that other networks want to develop this over time we have a model called an ambassador ambassadors are local people in local communities that refer good businesses

to a network of underwriters but the businesses have to submit things like uh their bank account statements so working with plaid which is you know an api for bank accounts or quickbooks api they also have like their social seller scores so maybe they're on google or yelp or even upwork airbnb things like this to show what type of business activity that they have and then in the future things like oracle nodes for the decentralized creditworthiness space we're currently working with teller finance to bring this data on chain for the businesses and the underwriting algorithm then basically tells our underwriters what the risk profile of the businesses are

and then the businesses are then the underwriters are then staking our utility token they're staking a 20 uh collateral to the credit line so this is like a form of a partial peg the reason that it's 20 is because you want to incentivize prudent lending but it's not necessary to have 100 of the collateral there because most of the businesses are going to be trustworthy and the underwriters basically bid for transaction fees that they're willing to accept from the businesses that they underwrite so their business model is basically like a decentralized you know credit uh processing payment network

so the utility token the utility is validating credit lines in our model and the transaction fees that they receive from the businesses that they underwrite is the long-term you know business model incentive for them and also they earn voting and participation rights in the resource dow so what happens when defaults occur so of course there's only 20 percent of the underwriter stake that's present and so that's up for being able to cover defaults when they do occur but the businesses are also signing contracts that they honor this as a legal

debt contract so if they're unable to close their debt position after the 12 months or whatever the length is of the credit line they basically go into default and then whatever jurisdiction that they're in it's liable for a debt as it would be like a unpaid medical bill or whatever it would be in your current jurisdiction and underwriters if they do continuous defaults are kicked out of the system so you're basically not allowed to continue you know participating as an underwriter if you're continuously making bad decisions oh sorry and also to mention that there are some of the transaction fees are going into like an insurance risk pool that can also be used to cover

defaults so the protocol that we've built has many different roles that are involved and i've talked about a few of them but just to reiterate we have the merchants these are the businesses they get the credit lines they're trading with the other members the underwriters are assessing the risk of the system and giving the credit lines to the businesses but then we also have delegating stakers so you can delegate your utility token to other underwriting groups within the system maybe some that focus on impact investing or maybe some that focus on uh specific industries like restaurants or you know whatever it would be that would be interesting to you we have

ambassadors this is basically our growth model these are people who refer businesses to the resource network and they also earn the utility token in exchange for doing that work so that's how we grow in a more decentralized way with those types of incentives then we have data providers so in the future we will be implementing different streams of data for the underwriters to see different types of creditworthiness data that exists on the internet but that will be fed in secure way to underwriters to build more evolved risk profiles and then finally we have network entrepreneurs so we've talked so far about the resource dollar and we

launched the first network and the first stable coin with this type of a protocol but we're building it so that anybody else could create their own uh endogenous currency in any other type of jurisdiction with any other type of peg so it doesn't have to be the us dollar something else and launch their own mutual credit network around that mutual credit token so about what we've done so far we launched in one city in the us these types of networks you know they're chicken and egg marketplace so focusing local makes sense for us at this time we have about 150 businesses that have joined and we've issued 650 000 resource

dollars in the credit line and there's been about a hundred thousand resource dollars in transactions for us what's really uh the biggest deal is that for 75 percent of these businesses this is their first crypto wallet and using the crypto wallet doesn't require any knowledge of crypto so what we're seeing as the reason people want to join is actually to use it to give their employees benefits and resource dollars so in america and in many places around the world there's a labor retention crisis very much accelerated by the pandemic so businesses small businesses really need more ways to keep their employees happy

so they've been using resource to give their employees basically a voucher they can use at each month within the network so we mentioned mother earth food they have 29 employees they deliver locally to your doorstep basically our model in the u.s is to expand in different cities with businesses like that using the resource dollar but of course we have models to launch other networks in the future and that's what we'll be focusing on next year so what other types of mutual credit currencies could you make so we have the sort of corporate benefits exchange live in the u.s we're really excited about emerging

markets and micro credit models so basically if thinking about like fintech entrepreneurs who have lending protocol lending companies or payment companies in other markets and partnering with them to issue mutual credit currencies to their existing networks of businesses there's also corporate barter use cases so companies that want to issue mutual credit currencies to trade amongst each other which gets around a lot of the problems with international currency exchanges that we've learned and then in the future web3 services so basically using a mutual credit currency to trade between the different

web 3 token-based models is something we're really excited about in the future so to talk a little bit more about what does it mean to evaluate credit so we've launched in the us we have a whole legal infrastructure and credit worthiness infrastructure available to us but in emerging markets there's a lot of other things that would need to be brought into the system to work so things like mobile payments things like peer-to-peer and vouching and microfinance models are things that we think long term will build the use case for resource in the global south and we can build this network of

basically different underwriting groups some of them can focus on you know just one industry just one region just one mutual credit network but some of them may decide to focus on multiple different networks at once so to come back to what are really the innovations that we're talking about here when we're talking about endogenous stable coins endogenous currencies over traditional fiat currencies so with this decentralized underwriting model we have access to more liquidity from the d5 innovations and we're building a more long-term stable business model from actually doing the work of issuing credit in this decentralized way but leveraging

existing trust systems so not trying to reinvent everything but bridging what we can from the systems that we have to create a new financial system that's more inclusive and works better for everyone and we're really excited about the potential of zero knowledge proofs to basically bring data to underwriters on chain in a secure way that doesn't disclose the privacy of the businesses which we all know is a big problem in blockchain today so we are currently in an alpha of our underwriting product and next month we will be launching the source utility token and the beginning of the resource dow

currently live just in the u.s network but by next year we expect the protocol to be able to be used to launch other networks in other parts of the world we're currently uh building on the cello blockchain but we're being compatible and liquidity for the source token will be on ethereum these are a little bit about our partnerships and this is how to stay in touch or contact us and feel free to reach out with questions or follow us on telegram or twitter for announcements coming up thank you very much