The New Global Stablecoin Thesis with Luca Prosperi

Transcript

We need three things to make it work. Uh to make it work for everyone uh because we don't believe in like vertically segmented stacks. I think we should create really open architecture networks [music] but they'll do it in their own fiat currency. They'll denominate their stable coins so that you don't have this is the same reason America is accelerating stable coin adoption. >> What needs to happen to actually see that go through? Because it seems like the logical next step for this entire kind of web 3 ecosystem. >> Welcome back to the rollup. This is your home to learn from the biggest guests, the brightest minds at the tip of innovation.

>> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. >> Sit back, relax, and enjoy it. [music] >> Luca, welcome to the show. Thanks for joining us. Uh, we had a hell of a week so far. Welcome to Buenosadis. >> Thanks, guys. Thanks for having me. >> Is it your first time?

>> No, I have been here before. Last time we met was like on the other side of the world. >> It was. It was all the way on the other side of the ocean. Yeah. And it was a fun chat, too. Uh, we met in Singapore. Uh, we had a great podcast. If you guys haven't seen it, go check it out. Uh, it's live on all the platforms. and you really helped to helped us understand how MZ is underpinning the entire stable coin super cycle. Uh this show is called stabled up. Uh and so I think uh anyone who's been stabled up in the last few weeks has done quite well in the market because [laughter] it's been >> they've saved their ass.

>> They've saved their ass if they've been stabled up. Um and so you're helping companies stable up uh at Mzero. The most recent partnership is uh Moon and you guys have done a partnership with Moonay uh to help enable enterprise stable coins. tell us a little bit about enterprise stable coins as a category. We we talk a lot about uh stable coins that are used for payments and and real fungeable money. Uh this these are typically genius compliance stable coins. Then you have yield bearing stable coins. Enterprise stable coins feels like it's a brand new category of stable coins. Generally stable coins super cycle. Uh why are enterprise stable coins particularly important?

>> Yeah, I I I think stable coins we we discussed this last time. In my opinion, stables are just piece of infrastructure >> like is the next way we will interact with money in digital form. So some stable coins are used to move money around. Other other forms of stable are just simply powering the dollar virtual accounts in an application. So they exist within an application. I think this is going to be the most uh the fastest growth uh category in it. So we will move around. Money will exist in places. we don't know what is powering it. So like money when exists within enterprise uh platforms is that's probably the category that you're referring to. Um but like ultimately this is a platform that will help

building so many different financial use cases like everything we're building now within a bank we we can decompose and build with and and the stable coin the stable coins are like the the the platform that connects them all on the ME I mean we've known the ME guys for a while. I think everybody knows Mi is like one of the most active and successful companies in the history of crypto. Uh and the team has been expanding their their reach. Uh they they obviously are one of the most famous onoff provider that the way people started to interact with crypto. Most recently they they have expanded to actually uh play more in the issuance stable condition space. You might have known like they have have done a set of acquisitions in that space. They got the

licenses required. So they are definitely one of the best and most likely cryptonative players that wants to expand their reach and help people to interact with crypto and simplify their lives. And we decided we decided a while back to partner where we could have we could have been we would have been M0 would have been the onchain infrastructure rail on top that we build. >> Yeah. >> So the this partnership was announced as most of the times when you announce the stuff there is still a lot of things to sort out behind the scenes. So now we are working like 247 to make sure that our our products and what we're offering to the market is live in the next like couple of weeks and we have a a bunch of partners potentially lined up that will will will issue on the ME zero stack in

the same way MetaMask is issued on the bridge and zero stack for example. Is it a strategic decision to go to the wallets the the MetaMask that's your flagship partner you helped launch the MetaMask stable coin now you're at Moonay Moon again payment provider you know is is this kind of like more going into this direction you're looking at distribution partners wallets uh fiat on-ramps off-ramps these sorts of things and you're going more and more in this direction is that is that intentionally the strategy and if so why >> yeah it's I think it's intentional up to a certain point I think m plays two things here. I think they obviously have connection with the distribution but they also now are trying to do other things but in my opinion like when you have you you build a piece of

infrastructure like M zero we want we need three things to make it work uh to make it work for everyone uh because we don't believe in like vertically segmented stacks. I think we should create really open architecture networks. We want to we want to work with the builders which is the most important thing. people that build cool stuff on top of our rails like the teams that build new financial use cases for crypto and non-crypto. So that's our main client. Let's say our main market. On the other side, we want to connect with financial institutions that can custody and can do the regulatory stuff because the stable the stable coins need to be really stable. uh and then also the connectivity with the distribution in the case I think mi was started as a as I don't know framp like distribution

machine and platform but now they want to become much more and I think so they can play both but in the is not they're not the only ones like we made the example of the friends of bridge that we also partner with I mean bridge can can help platforms and corporates bootstrap their own stable coin but the bridge is part of the stripe family and stripe obviously is huge distribution with vendors and merchants and users So we need a bit of all the elements. We're trying to build the most transparent rails for people to do cool stuff without being captured by one one vendor. >> So is Stripe exploring uh their own stable coin?

>> No, they're not. But Bridge is helping Bridge is helping others launch their own stable coins right on their and with some level of integration with with with Stripe. I don't know if Stripe is thinking about their own stable. >> I wasn't sure if you knew anything that we didn't know. >> I don't know. I don't know. I [laughter] don't know. Luka, we have a uh a consistent mental model on this specific segment of the show of Rollup TV where we discuss there's really two types of stable coins and I'm curious to hear if you agree with this. There's there's these genius compliant backed very clearly publicly onetoone uh stable coins uh that are almost like hard hard pegged to a dollar, right? It's it's basically it's almost impossible to have a DPEG uh situation because they're very clearly backed. And then you've got

these kind of yield bearing uh more uh esoteric exotic forms uh you know think about like the USDE of the world uh and these types which are uh natively yield bearing and provide a lot more kind of like functionality in DeFi but also come with certain risks and we're kind of seeing these two worlds really permeate as the two kind of like major classes of stable coins. Do you agree that that is the is the current right way of thinking about it or if you know if so why? If not you know what are we what are we kind of uh leaving out here? >> Yeah know I I I actually don't agree. Uh what I mean is slightly disagree let's say that I don't think these are two alternative models. I think these are two alternative layers.

>> What I mean is like nobody not even the no not even the the builders would actually call USD a stable coin >> and they wouldn't call USDA as as stable coin. I think everybody knows clearly that these are other things other products. So in my opinion I I look at things in in layers. I think in my opinion stable coins are platform a platform the main platform like super risk-f free. Uh the only yield they can provide is the risk-free yield. They're super liquid is like this kind of um fabric of finance. It currently is played by bank deposits. Like you have bank deposits going around. I think this is the main layer. This is what M0 is risk- free as risk-f free as liquid as programmable it comes and then people

can build products on top. So some people build payment products where there is no additional risk. It's just like another functionality. Some people build investment products and so I I think in st in like in different layers of the stack. So we are trying to build the best possible base layer for others to build product on top. Some of those products will not add additional risk because they will be they will do other things and others will add additional risk and additional returns. But I think it's very important to have this distinction because you know uh return is proportional to risk.

>> So nobody should ever market any asset that is yielding any any basis point above the risk-free rate by definition is not risk- free. >> And so you should think people should think about how they use and how they embed certain assets. also thinking about this right there. There there is the right product to do the right thing. So I kind of agree with you that these are two different categories. I just I wouldn't put them one uh next to the other but just one on top of the other. >> Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released [music] its new wallet. Guys, if you are still using hot wallets in 2025 2026, you are [music] missing the entire point. Secure your coins. Get a treasure at treasure.io. Havachi is fast and private [music] per trading secured by ZK with

Celestia underneath. Go to habachi.xyz to start [music] trading today. Trade on anything. Economics, weather, sports, crypto, and more. All on couch.com 24/7 [music] for the world's biggest prediction market. Holiday is unified crypto payments. Give your users more wherever they are. Go to holiday.xyz to never write a smart contract again. And one of the things that you can layer on top of the stablecoin base layer is FX, foreign exchange. Um, and so one of the missions of MZ, as I understand it, is to bring together a fragmented stable coin landscape. We have several US dollar denominated stable coins. But we also are starting to see >> dozens.

>> Yeah. Yeah. Dozens if not, you know, soon soon to be hundreds, right? Yeah. Yeah. >> And so eventually we'll also start to see the emergence of more geographically based stable coins that are not US dollar denominated but denominated in other fiat currencies. How how much are you looking at FX as one of the layers on top? Is M0 thinking at all about some of this functionality or generally how are you looking at the clearing of different denominations of stable coins? >> Yeah, I mean a lot of stuff that you're uh that you're that you're mentioning that's super relevant. I think in general like starting from the beginning I think stable coins are maturing like at the beginning stable coins were considered like a settlement asset for crypto trading that they became a payment asset for international payments

and then now it's some it is like an a proxy of a deposit business but it is ultimately a platform you can build stuff on top so uh this platform the most important thing is interoperability and shared liquidity like I always say like you know how many dollars I think we discussed this last time like how many dollars exist Today people say $1 there are like hundreds. Yeah. >> Because every bank the factor is a different form factor of a dollar but they are all interoperable and liquid behind the scenes. >> So what we're trying to do here is at M0 is first of all solve interop with technology not only liquidity because solving with liquidity is very inefficient. So you don't need necessarily clearing houses within the dollar denomination. Then we move to other currencies. Now we didn't need

other local currency stable coins when stable coins were like international payment products of course. But when stables become a platform to build financial services, then we have financial services in any low currency denomination. So we will have many more of this. Then obviously the FX problem will come. But I'm very I'm actually uh I'm bearish short-term uh onchain effects uh because I think that I used to be I used to work in Wall Street for quite a while uh in investment banking and you know f the FX market are the most liquid markets in the world >> are like it's super they're super super efficient in specific corridors. It's gonna take a while, right? I think we're gonna get there, but be first we need to bring the stuff on on chain that we need

to bring build new primitives and then we will start seeing these interactions on chain. But I think we're a few we a few years away. I think it seems the most obvious problem to solve but in my opinion from a capital perspective is actually the most difficult problem to solve. >> Uh FX because there is so much capital deployed in traditional >> rails. You know, we are obviously in Argentina, uh, where this country's been plagued by an inflationary regime that's gotten out of hand. I was here in 2023. It was one US dollar to 400 pesos was the rate and it's currently 1 to,400 and that was >> 3xed since >> Yeah, quite literally. And and I came in January of 2023, I believe, and then I also came back in April and it went from

300 to 400. So there was this insane rise uh of the dollar comparatively or this insane devaluation. Uh when it comes to uh bringing these new kind of emergent markets on chain, you know, stable coins seem to be the the most obvious easy thing to explain to people to get this kind of store of value with the US dollar. Um what what are we missing to onboard Turkey, Syria, Argentina, Ecuador, Venezuela and and the likes into a fully US dollar denominated uh economy using a neo bank app or iPhone or or or a mobile phone app? What what needs to happen to actually see that go through? Because it

seems like the logical next step for this entire kind of web 3 ecosystem. >> It's that we have conflicting interests, right? Right. I mean like uh the users, retail users, they want to preserve their market power, >> right? >> But the the governments and economies, they don't like to see this such a uh um like a an escape of capital from their environment. Yes. >> Because also also in good faith, right? Because this is just worsening the problem is making the local currency very very weak and uh it's like it's is worsening the economic problem. So some of the concerns about uh about um the capital escapes and it's uh are I mean

are legitimate because this is like I mean it's it is very very concerning. Uh the reason why the the governments put capital controls is that they want to stop they want to stop the bleeding. Uh but I but on the other side on the other side um it is a credible threat because now for for governments that are not very good with their fiscal policy they know they need they know they need to step up their games but it's so easy for people to move money out >> and u so we will see we will see a lot of pressure on uh on smaller economies to sort out their finances because now there is an option that is ready to go that you can you can access dollars or bitcoins or digital assets in a way that you couldn't do uh uh like 10 years ago

or 5 years ago. >> Then I I guess like a logical follow-up here is what what is the what is the path that you actually see like uh playing out here let's say the next fiveish years if we have these conflicting forces which obviously makes sense. Um you know is this going to be a peaceful kind of uh transition or or or or how does this because I feel like it's happening regardless right because if you're a citizen of one of these markets you're going to want US dollars. I mean whether your government wants you to do it or not, you're going to be taking care of your family, your what's important to you. How do you kind of see this transition happening? Um whether it be with policy makers, with governments, with uh entrepreneurs, what do you kind of see unfolding over the next couple

years? >> Yeah, I think it's not I mean couple of years is a short time, but I think it's uh it's happening as you're saying like you know when when something is possible is it is gonna happen. I don't think it's going to be gentle because because there are a lot like a lot of forces and ultimately but ultimately money wins. What I mean is like even for example even in the US or Europe right when stable coins emerged I mean we don't we we almost already forgot but you know to to build in crypto like a year ago in the US was very complicated. I don't know how to go. It was very complicated.

And we were in this situation and I I don't care about politics at all, but we were in this situation where we had the big banks that are lobbying for the Democrats and tech was lobbying for the Republicans, which is kind of weird >> because like stable coins also in the US, they are threatening the banking system because if you're a bank, you have very cheap deposits and you can lend this deposits out like nobody wants to give you money now because why do I need to give money to to a original bank if I can put money in a stable coin that's giving me so many other things. So even even within an economy there is going to be a lot of a lot of lobbying a lot of pressure because people are defending their business and the same is going to happen in like other markets

but at the end unfortunately or fortunately uh capitalism always prevails like even in like there are now like this uh we are not small startup businesses anymore. We can we can have our voice heard in the US in Europe. Uh Europe started saying we want to be very very conservative in stable coin. So you cannot build a stable coin de facto you can build a stable coin on top of banks >> which are very antiquated and now they're complaining because the capital is flying out and it's going into dollar stable coins. Sorry but not sorry like so so I think that now they will probably change their mind. So I think it's going to be it's going to be a combination. Uh it's going to it's not going to be gentle. Uh but let's see. I don't know. I don't know exactly how

it's going to happen, but most probably we will have in certain in certain jurisdictions more crypto friendly uh governments like has happened here at least on the surface. It's happened obviously in the US and and certain certain local equilibria status quo will change >> and ultimately but I think in I'm very bullish long long term. I'm I'm cautious short term because these dislocations they create problems right some people that don't have the the mindset the technology to move out and just take care of their families they will suffer right because they are left behind >> right >> want simple want fast want every chain [music] use relay.link the fastest bridge in crypto transfer your assets crosschain instantly with very low

slippage right now on relay.link link. Yet is built for big moments, the most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. >> Looking for yield that stands out? Infinify gives you just that. Deposit stable coins and earn far more than the current savings rate. Infinify is a battle tested, reliable DeFi platform that is ready to go. Head to infinifi.xyz. >> And governments could uh feel behind behind the curve like Europe is right now. as to your point now they're seeing the capital flight out out of their currencies and they're seeing it into stable coins US dollar denominated stable coins I think the point that you made uh at the very end is is one of the most important ones which is that this

could accelerate the crypto adoption in these countries once they realize that they're losing capital uh to the US dollar through stable coins you know they can choose to resist they can continue to resist but it is inevitable to your point and I think this will only once they realize this they will accept stable coins But they'll do it in their own fiat currency. They'll denominate their stable coins so that you don't have this is the same reason America is accelerating stable coin adoption. It's because it's not fiat that is going into some other currency. They're saying fiat go into their same US dollar denominated currency. You don't want capital flight out of your denomination. Doesn't matter the form factor. To your point, you just want it to stay in your denomination.

And so once other countries realize that they're losing capital flight to the US dollar, they'll end up just creating the more advanced form factor of their own denomination. >> Yeah. And then a couple of things to add is like yes, for sure we live in a more global environment. So some weak weaker currencies will struggle because now we're super interconnected compared to like 50 years ago. Uh but the other thing is and then you know we are very open builders and we always like we try not to engage with with regulators too much because typically it's a waste of time. >> Uh but we are really I mean I and I I I mention I'll mention this also in the podcast regulators should reach out and have constructive conversations because this is going to happen. So unless they

need to be reactive because in five years they need to defend themselves and somebody's going to vote them out. is actually better to be constructive with technology builders because this stuff cannot be stopped. It's so funny like Revolute for example. Revolute is one of the most successful fintexs in in the world ever. >> I think Revolute is based in the UK. I think they move they just moved out of the UK. Probably the headquarters is now in Dubai or but it's been they started in the UK. They are the probably the largest one of the largest banks in terms of UK users. Revolute doesn't have a UK banking license yet. >> Wow. >> They're not giving it to them. >> They don't have a banking license.

They're using partner banks in the UK. They have banking license in Europe because they because the UK is worried that Revolute as a as as a as a NEO bank. I believe they didn't have a banking license until recently. I think they still don't because they're they are afraid of that. But I mean better products win. >> Yeah. >> So their customers are going there. So what are these guys doing? M >> um I hope I really we really hope the regulator is going to be not crazy uh but constructive in just engaging with smart founders and builders that are building cool stuff that can help their economy >> and our world is so interconnected now.

This is this happens in UK and like you said they moved out of the UK. They weren't getting what the the UK wasn't providing them the sort of regulatory clarity that they were looking for and so now they're in Dubai that you know uh uh based on what you said. Uh how many companies are we seeing in the states move out of Delaware or go to Texas or move out of California and go to Texas? Um this is happening because we have a more connected world where we can pick up we can move our companies if we're not seeing the type of structure that we're looking for on a regulatory or a government landscape. Um >> just one thing to add there guys. I it's uh it's the point of some folks will will take the uh entrepreneurial uh jump to do something that is borderline uh

you know uh debatably legal in their jurisdiction on the behalf of everyone else. Those folks are few and far between. And also the folks who will uh you know if their government is telling them that they cannot hold stable coins or that that they cannot you know take money from their bank account put it onto an exchange and and and kind of operate in this like stealthy you know quasi illegal fashion those folks are also few and far between. And so when you have this kind of oversight from this like restrictive oversight from governments or from uh you know you know leaders it it it really creates that further divide. And I just wanted to kind of like double click on that point because I feel like that is the that is the concern of the stable coin adoption

cycles that there's going to be this this kind of bifurcation of people that are able to kind of escape in in ways and who are willing to take that risk and those who don't. Um and that split is going to be uh a unique development to watch. >> Yeah. And also uh you can you cannot going back to what we said before you cannot ignore reality because currently technology gives us the ability to have a global connected system. >> So it's going to work like even even in even in uh if people cannot use stable coin they will use bitcoin >> or they will use e and there there there are so many so many ways that are not necessarily good for for the users. I think we should always have we should

always be constructive and um but I I feel it's happening. I mean like comp like compared to a couple years ago there's no no comparison. >> Yeah, certainly is. Uh and the reason why is uh what's on this shirt, we're returning to fundamentals and that's what's happening. Stable coins are one of the fundamental things uh not ethically but well like to >> yeah gift to you. Uh guys, >> absolutely. Return of fundamentals, payments, stable coins are one of the most fundamental things that are happening on chain. Remittances and uh MZ is helping to power this new economy.

>> Luka, what does return to fundamentals mean to you in a short uh in a short uh exert >> for me is uh spending time doing the difficult stuff. >> Yeah. >> That makes a difference. >> Yeah. >> So just get away from the fluff and just spending time solving the difficult problems. >> Yeah. Luca Prospero, thanks for your time man. >> Thanks so much, guys. Good to see you again. >> Pleasure to have you. >> Cheers.