Save Money like your Ancestors: Stacks and other Solidarity Tools

Transcript

to uh cool. Hi everyone, my name is Josh Davila. I'm the co-founder of Bread Cooperative. Um, we're a worker self uh worker self-directed uh nonprofit where we build uh in large part solidarity finance applications using crypto as a way to um to build them out and expand the existing solidarity economy. And we're also a developer studio. So if you're looking for people to help uh build your products but today's talk is called save money like your ancestors stacks and other solidarity tools. So, um, I'm using just what I'm going to do is going to go through a presentation

that talks a bit high level of what we've built and then I'll show you a showcase of what it is that we're that we're shooting for that we're trying to build out. Um, so yeah, bread cooperative, we are, like I said, a worker cooperative. We've built quite a few different applications. U one is the solidarity fund in which we combined a local currency with a credit union um built on Nosis chain where users are able to to give XI in return. They get uh bread tokens and what happens in the background is yield gets accumulated and distributed to a set of member projects based on a vote from bread holders. So this product has been around for a

couple of years now and it's been working quite well and now we're wanting to expand our portfolio and build some some more solidarity tools uh in our tool set so that we can expand the bread ecosystem and that's why we're talking about stacks specifically. Um oh and here are the here are the tools. Um and then down the line in the future we have another product in mind called safety net which is a kind of mutual insurance based on the bread funds uh scheme in the Netherlands.

Um but so stacks is this implementation is based on a Rosa or a rotating savings and credit association which is actually quite common in the in the global south and in other places where you don't have easy access to financial institutions and banks. Um in Mexico they call them tandas. in West Africa, Suzus. You may have heard many different names uh for what is effectively at least very similar type of financial arrangement. Um and so what we've done is we've created a smart contract version of what is the most basic version of a of a Roska. Um each country or or culture that does something like this, they'll

have a slight variation. It'll be slightly different. So, um, the one that we've made right now is just the the most basic version and this in this in the product that we have so far is basically the the proof of concept for being able to use smart contracts to to develop this. Um, so how does the saving circle work? Uh, effectively it's a way to collectivize people's savings while offering zero interest loans. Um, relying historically maj for the most part on social trust. Um, so let's say we have three people in a group who all want to do a saving circle together. Uh, we would all all of us would deposit the same amount of money in the first round and one person would receive the full pot and then in the next round we would

all put in the same amount of money in the pot and then the next person would get the full pots and everyone would get their turn in order to receive the full pot of money. And so in the end once everyone has had their turn essentially everyone's debts are neutral are are at zero and everyone's paid off. Um it's effectively depending on the position you are in the group you are either a lender or a lendee and oftentimes the the direction may change or the the ordering may change that people have a variation of of where they where they sit along that spectrum. Um and so this is a very basic form of arasa in places like India where they do chit funds it works slightly differently where they'll have a kind of auction system where people can can bid on whether or not they take the pot. Uh so

those who are willing to sacrifice more early are able to get earlier access to liquidity. Um but so this system is uh you know why do something like this? I think for some people if you've lived maybe in places where you have more stable financial system it may seem kind of strange to do something like this why would you why would you intermingle these things that seem your friends with with money. Um but actually there's a lot of reasons uh why you would want to do this. Um, one, it allows you to build relationships with others in in your group and in your uh in your community.

Um, there are very small loan amounts as well. You have short repayment period uh periods. Uh, the transaction costs are low and you're not putting you're putting mainly social collateral on the line, not uh any other type of financial collateral. So, this particularly useful for people who don't own very many assets, of course. Um, and there's a clear framework of incentives. Um, and it naturally reinforces social ties. A really interesting study in Vietnam found that uh farmers that participated in Rascas were actually significantly better at uh savings and were able to reach their savings goals compared to those who were trying to save solely individually. So the kind of psychological effects and of the social

um uh of just kind of like doing it in a social way tends to have better outcomes for reaching uh financial goals. Um and so some of the kind of major use cases for saving circles would include uh major life expenses. So if you're um you know needing to buy books for your children uh it's a good moment to receive this injection of liquidity which maybe if you were trying to save individually it might be more difficult to save for that. Um but because you have this social pressure to to save money with everyone else and you know that you're going to receive this injection of capital at the time when you need it. You'll be able to make these uh bigger life purchases. So you can buy books for your kids. Uh you can pay for medical expenses as they come

up. You can buy a car. uh maybe uh you have someone in your family who's getting married, so for your wedding. Um and as well for business expenses, it's really nice to have uh you can have effectively a zerointerest loan for starting your business. And so if you're planning to make money off the thing that you're putting money into, then it's a really good deal because otherwise going to a bank, you are going to have to pay interest rates. And depending on where you are, what your credit history is like, it may be a pretty extractive percentage uh uh interest that you'll have to pay because of uh like for that loan. Um and so why a blockchain? So some of you maybe have noticed that uh with social, you know, social reputation or collateral on the

line, it does mean that there is a space where people can steal money from you, right? Um usually saving circles are done in cash and one person or two maybe be the ones who are tracking everything for everyone in order to uh so that everyone doesn't have to do the math behind a savings circle. Um, and so in I know that in Mexico sometimes the tanda what they call is sometimes associated with Ponzi schemes because the person who is managing the the tanda will run away with the money. Um, and so this is something that we think blockchains are actually pretty pretty good at trying to prevent or at least able to track where that money is going and where it is. And rather than kind of relying on purely

just trust in somebody else, you're able to rely on the cryptographic guarantees that that blockchain uh enables by offering some kind of decentralized escro service, right? Where you can put money in the smart contract. So you're not trusting a person, but uh a deterministic computer uh code to be able to uh pass around the money and the liquidity as as agreed upon. It also allows you to do a level of collective governance uh digitally. Um it allows you to you have you know pretty cheap transaction costs especially on Nosis chain which we're where we're building this largely on. Um it also I think what's really nice is that um although usually saving circles are very informal uh the what with a blockchain we're able

to automatically record any movement of funds and therefore we can also record a kind of credit history for people because they are engaging in loans right they may people when they do it they may not necessarily see themselves as you know giving out a loan or like taking out a loan but they are engaging in something like that and so we think this is something down the line that where you can bring a lot of people who are not involved in or are not like able to enter into the traditional financial system to be able to build that credit history so that they can qualify for you know other things down the line that that may be useful for them through uh that require a credit score.

Um another thing that's really interesting I think that we uh that isn't you know exactly possible without a blockchain are programmable incentives. Um so due to people's actions we can uh reward them for reaching their savings goals and things like that. Um of course with crypto you get resistance from debanking. So, we know we've I've I've spoken to a group in in the US that does that facilitates um saving circles and and tandas in California for a lot of undocumented peoples and they uh you know they they run the risk um with a lot of them that they get their their bank accounts uh blocked because they don't have the right documentation or they're not able to access banking services. Um and of course there's DeFi. Um, and then

there's uh as well some point in the future we'll have a nice portable identity solution hopefully. Um, so we have we have a real uh demo that is public. If you go to our website at bread.cop you can find um a link if you there's a under one of the the menu sub menus there's stacks and you can find it there. Um, if you aren't already in it, I would highly recommend joining our uh bread co-op friends Telegram group, which is just here in the corner. We'll share some some updates there about the product and then also we'll share we'll have a a park hangout on Friday if you want to come by. Um, the the the demo of the actual application right now we think will be good to do a

bit later. So, Francisco, who's sitting right there, um, find him if you want to try out the the actual demo of the product. What I want to show you which I think is more interesting just for this context is to is what we're trying to build towards. So I've made just kind of like a vibecoded demo of the type of features that we want to build towards as a way to illustrate and create a story for what we want to get towards and see if there are any interesting collaborations and what uh what you guys are thinking about doing and building. Um so we can maybe team up and see where where we align. Um so yeah, thank you. I will I'll maybe stop here before I get into I don't know if there any maybe questions just to check in.

I explained it really well then. Okay. So, um this is this is the kind of showcase uh of the product. So, this is kind of aspirational of where the direction that we want to go with this product. Um the idea is that you would come to the STAX websites or STAX application. Um I mean it could be that STAX is actually integrated into other types of applications but just for this showcase um you would create a an account uh in in in a way that is more like a web two type of experience. So we want to abstract away the crypto aspects of all of this and by creating uh an

account through this like a um like through the web two way we can just offer you a wallet that's already inside of the application. you would maybe share a little bit about yourself. So what are you trying to save for? What are you trying to do with this application? And that will help us be able to recommend different types of services or different types of you know things for you to to go for in the application. Continue. Maybe we'll have some type of um identity to some degree, privacy preserving in some way uh which will be important to to explain later down the line. because, you know, uh this is like peer-to-peer lending. It's something important to have some amount of identity so that we can track um who someone is and whether or not they're a

trustworthy person and other people can also verify that this person is who they say they are. Um and they can trust that this is the right profile for me to start a saving circle with that person. Um and so I think you first start off on the dashboard. So in this case we're Diego and Diego has a few different stacks that he's created. Um and so if we click on create stack the idea is that this wouldn't be just the feroscas but that in fact there are many different types of collective um uh savings types of financial arrangements that we could implement in the application using smart contracts to to

kind of facilitate them if if they make sense. So you could choose between with a Rosa with a classic setup. Maybe you want a chit fund because you're based in India and that's where what you're most used to. Um or we can do things like competing with your friends just to save a bit of money. We can uh look into you know the literature of what other countries however they do their type of collective savings. There's also things called ASCAS or accumulating savings credits association which is where everyone puts in money and people are allowed to take out a loan based on a certain multiple of how much that they've put in. Um so that's another another version of a kind of ROSA but accumulating. Um and so you would continue and you would put in the

information about the about the circle that you want to join. um whatever else. And then you would continue and it would uh well, we skipped it, but it'll ask you to invite your friends and then you can make it and and start it up. And so if we go to the uh specific Ruska where maybe I have a a Ruska with my family where we're all uh sharing some money together, um I can see here, you know, where I am in the line and who is next uh in the order. So I know that I so I received my payout first. So, I've already been been paid out. So, that means that I'm effectively taking out a loan from everybody else, but I will pay it off over time in three more installments to these next three people

in order to to pay it out. Um, and so down here, I think we're doing so we're doing $500 per per week or per month. Um, and so the pot that I received in the beginning is $2,000. Um and then we would hope you would have uh of course I try to make this as easy as possible a kind of automatic depositing uh system in the back end. Um and so yeah so each of these different types of stacks will have a different kind of uh user interface based on what it is exactly you're doing. So a chit fund will you can see you can place a bid in order to make a bid on on the pot. Um I go back

uh and so forth. And so this is just like kind of like the the highle overview. Um I can go here and I can look at, you know, different types of stacks. I can see the ones that are active right now. Maybe they're pending because someone has set it up and I just need to to verify something or someone else needs to. The ones that are completed, decommissioned. Um and because collective savings is not just a financial arrangement, it's also a social arrangement. What we think is going to be really important is to have communities or to have spaces where people have a boundary for who they're interacting with and who they're wanting to find others to engage in saving circles or stacks with.

And so we're imagining that this could be set up in many different ways. It could be communities that are based on people wanting to save towards the same goal. So, let's say if uh you know I really want to buy a home and I really want to look into collective uh a collective savings arrangement as a way to be able to afford my first home because um you know technically I could afford a mortgage. I just can't afford the down payment maybe is is the issue. And so I I want to find other people who we can each take turns by offering a little bit of each other's liquidity so that they're able to better afford the uh down payment that is required in order to to purchase a home. Um so in our community we can we can scroll down

and we can see you know activity that's in it. We can see the stacks that were started from this community. We can go into into the discussion. We can see the forum. We can see uh what people are talking about. Maybe people are offering tips and tricks for how best to to save money for a home and what are the um you know regulations that are that are uh uh at play for if you want to go um begin purchasing a home. You can see the other members where they are. So maybe you can also find other people within this group that are also maybe you want someone who is also in a similar context. So also in the same country and also trying to save for their um uh for their house and you know earlier when you saw in the signup

we were asking how much are you wanting to save? What is the goal that you want? So we can kind of um offer a service to matchmake each other. So I think it's you know it's almost like dating a little bit but you kind of need a little bit of a push uh to come and and and meet each other and get to know each other. And we're imagining potentially, you know, some of these uh communities could have some some form of governance in them as well. Um but additionally, what I think is kind of the most interest like the most at least on our side, what can be interesting as far as a strategy for sustainability of the product is to offer this as a kind of employee benefit uh to those who are already engaging in

saving circles anyway. So in in Mexico, we know that tandas are very commonly done with co-workers. Um and so rather than just kind of like keeping it purely informal amongst co-workers, um an employer is actually incentivized to get employees to achieve their savings goals. Like an employee that is able to achieve their savings goals and achieve the the lifestyle that they want within within the boundaries of what they're paid is generally a happier employee. And so what we're imagining this is uh a place where employees would be able to offer uh matching funds or a kind of incentive for uh co-workers to effectively get along and uh try to

collectively save money with each other and if they are successful in in saving money together that they would uh get a little bit of extra on top of that. Um, so a little bit of an incentive to to do that. And so inside you can kind of see, you know, maybe internal discussions about about the company or whatever else that might be interesting. Um, we'll have to see when we when we approach employers what they want. Um, and yeah, so that's kind of um those are communities uh inside the you know, we want a really web two type of experience with the wallet. So you can see, you know, I have this much amount of money and maybe this much amount of cash available. My portfolio is 3,000, but my cash is 2,500. So I have maybe $500

right now that's being deployed in one of these stacks. Um, if I go to trust score, maybe. So here, like I said, you know, you're effectively engaging in peer-to-peer lending. So you're building up a a credit history effectively like if we are tracking you know that you are making these payments or not making these payments that's effectively the same as uh as making a credit score. And so we think in order to this is really important as a way to build trust within a digital space um that you can see that someone has been able to effectively save money and uh pay their obligations over time in a way

that is um effective and builds trust. Um, and so we can kind of create different trust tiers, you know, where if you if you've completed so many Ruskas with people, then uh you're a certain tier uh from newcomer to a contributor that you're reliable, that you're trusted, or maybe you are a pillar of your community because you're always on time with with all of your your payments. Um, and so this is something that we think as well, especially in the case, this is something we've discussed a bit with um in in in the United States with people who are undocumented, uh, that a way to potentially take this credit history and turn it into something that you can build as a as a real credit

report. So in uh in the United States and also in many other countries, you're able to uh submit data to credit reporting agencies. So in that way you can build a credit score in the official um credit agencies. Uh so this is something that would take I mean a bit of a bit of research into knowing which countries have this as a possibility and what their data standards are, but it's something that we at least have the basics to be able to um to be able to fill in that information. Um, additionally, we think it would be interesting to have matching funds. So, to have a way for anybody to be able to to provide matching funds so that

specific types of people maybe who are reaching their savings goals uh maybe would be incentivized to to achieve them and make a little bit more money. So, um I'm imagining philanthropists maybe who want specifically to incentivize women in Mexico. So if we could do something like ZK passport as a type of identity solution where you can say you can prove that you are you have a Mexican uh citizenship and you are uh a woman. Um and we don't have we just need the the ZK proof for that. We don't have to hold store that that information anywhere. Um then that way we can validate and we can go to philanthropists and whoever else that uh they can go and um they can effectively very easily be able to do

this type of impact work that they would want to do and we can prove that impact with onchain data. Um and so yeah could be you know people who really want to we can have like an end an endowment for those who are saving towards homes or saving towards certain goals. um crypto makes it very easy for these types of program programmed uh incentives. And then maybe the last thing I'll show uh is the marketplace. So like I said, you know, what we're trying to build is effectively the super app for collective savings, right? So whatever kind of financial arrangements that involves collective savings could be pretty could be an interesting um addition to this.

And so when you have a lot of people who are saving money, you're also creating a type of power. Um so the way that often uh producer cooperatives work is that they they pull their money together in order to buy things in bulk, right? And the it's to kind of like if you if you've been to the US and go to Sam's Club or whatever, you go to the grocery store where they the more the bigger thing that you sell, the cheaper it is per per item. The idea is that here uh with these groups who have money that they're saving together and they're wanting to to spend that they would be able to spend that on things in order to receive discounts uh on products. Um of course the easiest ones to offer would be digital ones. So maybe you get a

NosisVPN hint hint on the uh with the discount if you buy 10 of them at once. And of course the science shows psychologically that when you make group purchases generally people have a stronger attachment to them because they're doing it in like a a social setting. So we think there's like a you know a business um aspect to all this as well. So we could uh approach different types of vendors. Um so yeah maybe I'll I'll I'll end it there I think. Um, so I have time for maybe some questions, but uh this is kind of as aspirationally what we're trying to go for. We have uh our our proof of concept version is publicly available. Francisco is the is the one you want to go to and he'll

he'll set you up and you can try it out and we'd love feedback on it. It's still it's much more basic than than what I showed you here because we're trying to get the the the base primitives correct before we like really start to to expand out. Um but yeah and then if you guys come to our uh yeah our park hangouts then maybe we can also try some saving circles there. But yeah would love to I'll end it here and maybe check if there are any questions. Sorry. Oh we also have we have a booth downstairs as well if you want to talk.

Uh so thank you for the presentation. I understand this aspirational but where do you want to start? Like do you want to pick one of the savings options and then start there or do you have a multiple in mind like >> Yeah. So right now we're right now we're starting with Roskas because that's what we that's what we started with. Um and then I think the the idea is that we're going to start with the communities that we're closest to. So I think part of the part of the still the problem that we have to solve is onboarding. Um onboarding is a is a big issue. So right now kind of people who have crypto are the easiest ones to to approach because they already have stuff on chain. Of course, we we right now, you know, there

are options, of course, for people to onboard, but to kind of go to people who have never used crypto before and ask them to onboard is kind of like a it's a whole thing in itself, but we think that there is a lot of promise in some stuff that are coming out. So, we're trying to talk to other service providers like Monarium or I mean potentially Nosis Pay or whatever else where they can offer maybe something like an IBAN uh for users to be able to more easily onboard. they can just make a bank transfer and then they can uh have the money in the in their account and I think that would feel kind of um yeah one way but I think as well we're approaching we have a uh we're hoping to do a pilot in Nigeria so we have like a group there we're working

with um a philanthropic group that offers uh solar powered equipment to rural communities in Africa and the idea is that they would use the money that they save from the solarp powered equipment in order to start a savings circle um is the idea. But I think the and then we're also speaking to logos as well uh as a potential partner in all this. But um it'll depend on I think they they each have kind of slightly different use cases. So the Roskas I think it would be people who have uh you know experience with Rosskas. You know, in the case with Logos, I think the thing that we're going to have to build is rather than the one person receiving the full pot, it's something where people are just collectively savings and it goes to like a shared like a shared wallet or something like that where they

can govern how they want to to use it. So, >> uh I was going to ask a follow-up question, but you already answered it like which market you were going to choose to run a pilot with, but I guess Nigeria is one of them. Uh, have you thought about using Mini Pay and like doing a mini app inside Mini Pay to like get distribution for that market? >> Not yet, but I'm happy to to explore it. >> Has anyone done Arasa before in here?

>> Yeah. for the recording. >> Oh, thank you. >> Yeah. Um, so it's I think it's very common across Latin America to do this kind of thing where >> people mostly well I know in Guatemala it's mostly women who get together and put in money every month and then every one person gets some cash every month and they it's also like a community event like they get together and cook food and eat and like gossip and in the end the money is given out and people use it to pay you know different things but same concept I guess Okay.

>> Yeah. So my question is about uh trust because those practices that uh are pretty common in Latin America for example I how I have encountered them is that my exgirlfriend she had a friend who was suddenly started to be very pushy in terms of like hey participate to this thing. um you know otherwise you wouldn't get their money back because uh you know their pony schemes uh in some forms right so um yeah so at least that was the uh how it was imported in um uh in Italy I guess uh so they were also sold as

um a space of mutual support between women But in reality it was like a big scam. >> So uh here how do you prevent the people stop paying? >> Uh yes I mean there I think there are like of course like the way it's set up like it it relies on trust like kind of normally. Uh so you have to be careful with who usually you pick people to do it with that you have some sort of relationship in some way and that there they have some sort of social reputation on the line that they wouldn't want to lose like to their community. I mean I'm also curious like in Guatemala how if

this is I assume this like is a problem every once in a while or I don't know. >> Honestly no I never heard of this happening. I guess the ones I knew about was smaller like only people who really know each other and have been friends for a really long time or co-workers but that have worked together for it's not like big groups like maybe eight people 10 people. So if it happens I mean it would be like a big everybody would know you stolen from your friends. So I guess that's like the big deterrent like everybody knows who you are and then if you don't put in the money not only you'll never get invited and all this stuff but everybody's going to know you're a thief. So I guess it's very like community it's very tied to the

community base. I don't know how scalable that trust is but that's I guess the big problem. >> Yeah. Yeah. So like one of So I mean one of the things that I know that like in Egypt there's like there's a really big uh digital platform where they do also similar kind of thing as saving circles but they they have like legal contracts that you sign as part of like the sign up. So you will get in a lot of trouble I think if you I think they'll go after you if you don't if you don't pay pay in and so it's like a very large savings circle effectively. But um what we're hoping is that here we can provide we can use I we can use DeFi to to earn a bit of interest out there in order to fund insurance and probably and

potentially offer that as like a separate product or something like that where people can be insured uh on these things. Um or we just have to you know we backs stop up to a certain a certain amount or certain level based on the amount of money that's being spread out. So I think uh there is trust in terms of we can guarantee that someone uh they like someone can't run off with the money in the sense that like they were the ones trusted to control all of it. Um, but if they are the ones who receive like a peer-to-p peer loan and then they they run away, uh, and then you and you trusted someone that you didn't know, that you didn't have any relationship with, and you know, they're just an avatar on on the internet, then like that's a I think probably the thing

that we have to do is pro uh is provide within the social layer of the of the application ways to like verify who someone is and like um yeah, provide that trust there. Um, so you said something about a pilot in Nigeria and things like this, but I guess the what is always on my mind is how do you bridge this like DeFi money into like real world money I guess in a way like if if a person's in a village somewhere want to participate in this what's their incent?

>> Yeah. Yeah. Yeah. I mean that's why kind of right now we're largely focused on like digital services like things that people can can purchase online. So anything that is online can be purchased you know with crypto one way or another. The other option is we can um I mean just wait for like what are the things that that are coming out hopefully like over the next few years. So, it's also a bet that like it'll get better. Um, and that it'll Yeah, I mean, it's like either, of course, if they're in a place where they have no access to ways of offboarding, then it's not a good market to to work in, I think. Um but uh the the bet is that in a lot of

places it's going to improve and you will be able to kind of convert uh by paying either digitally or with a card of some sort that you will be able to to do that. Um but yeah, but if you have no internet access and you have you know everything is in is purely in cash then of course it's going to be really hard. Yeah. Cool. All right. Thanks so much. Appreciate it.