Stablecoins! Crypto's Killer App | Nic Carter, Visa, Frax, Maker

Transcript

perfect this is a big group we could field a i don't know small intramural basketball team so i'll be more of the quarterback here um but as mike laid out the the name of this this panel is uh stablecoin the killer app so obviously that meaning has uh changed a bit in the past week and we were supposed to have do quan here he is not available this week but i'm sure we'll talk a lot about that but i actually would love for you guys to introduce yourselves and give a little

bit of your background kind of how you got into crypto but just so people are familiar with what you're doing here we'll start with nick we'll go down the line and then we can get into the killer app discussion hi everyone and thank you uh to the block rickson bankless team nick carter general partner castle island ventures stable coin enthusiast uh probably but only the right kinds of stable coins but yeah i'll keep it brief perfect nice to be here i'm joao riginado vpo product at circle stablecoin builder if you want uh i was the the product lead for the build out of uscc which is the second largest fiat backstable coin these days and i

lead all the product initiatives around stable coins for circuit today perfect good morning everyone my name is catherine gu i'm from visa so part of the visa crypto team we started back in 2018 actually during a crypto bear market and i'm the head of the cbdcm protocol so we're looking at all things around your currencies as well as protocols that you know layer one layer two solutions that could be important in terms of infrastructure so very excited to be here hello i'm sam i work on the protocol engineering team we do smart contracts development for maker dow you may know me as hexanaugh on twitter you have some fans in the audience um okay perfect well let's get into it nick

i'm going to start with you i want to do a bit of a post mortem here other sam oh my god sam i didn't expect hold on okay hold on i did not realize that sam was going to be remote someone might have told me that but wow sam i'm sorry hello i thought i looked over and was like i guess sam's not coming no no no hey everyone well last but not least yes so hey everyone i'm uh sam kasman founder of frax finance uh frax is a fractional algorithmic i guess it's a it's a weird word to say these days so

uh yeah we've we've been doing really well and excited to be here through the metaverse love it okay so i missed the speaker's meeting actually on friday so anyway i'll make sure to get you in the loop here and um all right but we're going to start with nick on a postmortem here for tara usd and luna was this a failed idea from the beginning walk us through what happened here yeah it was reckless financial engineering you know people think of this as uh software engineering but it's financial engineering right and i remember calling you a couple months ago and saying this thing's something bad's gonna happen right i called nick actually to be like hold on can you

explain this to me and yes exactly so it was pretty predictable if you had a little bit of perspective right and were at least somewhat familiar with the history of currency pegs and then also just if you if you had a little bit of sense and you uh inspected the mechanism but not many people were willing to do that because it was really veiled in complexity and i think you know deliberately so you know often crypto people have a habit of making things incredibly opaque and complex so that the relevant people can't investigate and understand the mechanisms but yeah i mean uh a lot of people will say oh it's just a matter of getting the right parameters and let's try again and you know let's let's tweak this and that but you know fundamentally this is a kind of

financial alchemy to try and create uh you know a truly under-reserved uh you know stable coin system that can survive and grow uh just based on user trust so you know some things are just not worth attempting why do you think there wasn't more skepticism you like you mentioned were probably one of the few that at least said it publicly do you feel like there was a sense that people couldn't speak out against this because you had jo kwon on twitter and a lot of believers in this project and high profile investors is in this project was that part of the issue here 100 yeah i mean uh there is a sense that you didn't want to offend your industry colleagues your industry peers who are invested in this uh frankly and i'll be candid doe was

extremely aggressive with critics i think everybody who was a high profile critic experienced that and uh the the terror army they literally called themselves lunatics yeah you know um and so there were enormous disincentives to speak out um and and you know ultimately not that many people did so the information market didn't clear got it i'm gonna go to sam and if you could maybe talk about uh on the technical side your thoughts on tara and luna what happened here yeah i agree with nick completely i mean people were doing analysis on this it was completely reckless and you could see that pretty much from the start i think this kind of highlights the need for collateralization and why maker dao has taken the more

conservative approach of over collateralizing it doesn't scale quite as quickly but in the end the users who are holding die can be certain that they can trade it for a dollar and that's that's what's important i'd actually be interested to get both of your perspective perspectives on this in terms of what this is done from a reputational risk when it comes to stable coins um joao maybe we can get your thoughts on that for usdc was there any thought that either from a regulatory standpoint or just from an investor confidence standpoint that this could really be a hit to usdc and other private stable coins yeah i think it's very unfortunate for the stablecoin space right because

our belief is that the world needs uh this uber dollar api that runs on chain right we're all trying to build different versions of that but uh but but if you think about it and the way that we look at something like uic it is a platform right i think people tend to focus a lot on the on the bare asset side of a stable coin you know and the end users that hold it and transact but actually it's such an important piece of substrate for the industry that you have all these ecosystems and developers and businesses building on top of that and from that perspective you we feel the responsibility for building a platform that is going to be there for developers and for businesses for the long term you can't build something that is going to be exploding

in a year's time right that's super bad for the industry for the reputation of this kind of instrument i don't know what what um what complications or impact we're going to have on the regulatory side i don't think you know people have been talking about it but uh there's no practical change yet but i expect this is going to be a little bit of a purple eye for the industry right in the definition yeah absolutely well sam will get to you as well um catherine you are a visa highly regulated company i'd love to get your thoughts working on something like this and will it make it harder for a company like visa to get into certain stable coins i wonder what the process is on the company side for visa in terms of

either using certain stable coins and walk us through that absolutely i mean you know firstly we do think that your currencies will probably have a very lasting impact in terms of how the future of money movements will go and also how financial services will be constructed and that's why with that premise we go in with a lot of trying to figure out really interesting use cases and i think you know just thinking about this space in general visa's focus is more on the fiat backed type of dual currency so that's whether it's in stable coins or you know central bank dual currencies these are the things we want to look at because we want to understand how the different types of future money can be moved on what different rails and how these sort of financial services can then interact

and interpret with one another so with that in mind this is how we've been looking at this space and i think you know going back to all the panelists were saying earlier is really important to kind of think about how these different projects are being constructed of course we need to have the sort of the safeguards and also the type of standards um like set up because that's important for consumers for retail investors for institutions all to have that in mind so but you know we do think that digital currency have a very powerful impact in the future got it and sam there you are your take on this yeah believe it or not i actually i actually do agree with uh nick and and sam a lot of what they have to say but let me actually paint a picture for you guys here so

for people in the audience that aren't familiar with frax uh we're the first project to basically introduce a fractional algorithmic stable point so what that means is well part of the supply is backed by hard assets over collateralized loans and all that all the good stuff other stable coins partly usdc as well as well as die uh part of the supply actually very small of this little of the supply right now around 11 is algorithmic uh minted fracs which means it is depending on how you want to call it under collateralized or uh the supply is actually stabilized by contractions and expansions for x is basically 89 backed right now in in real time everything's on chain the dynamic

adjustment of the clutter ratio is on chain um and one thing that's important to highlight is is i think uh as far as i know right now frax and uh dye are the only decentralized stable coins uh at scale meaning over a billion in supply that uh haven't broken peg fracks this is the you know only algorithmic stable coin that's this never broke its peg in its 16 months uh since launch i actually agree with a lot of what uh nick says because the whole reason we created frax for example is we we agree that you need exogenous collateral you actually need other collateral that's not this kind of reflexive game of trying to

stabilize the supply of of the stable coin to meet exactly demand part of the the actual supply can be dynamically you know algorithmically adjusted and that's that's basically the the premise of a fraction so far after 16 months of you know growth the the protocol is uh extremely profitable it has revenues of 150 million annually uh with only a 1.5 billion supply that's almost like a 10 uh give or take uh balance sheet return um 20 of curves tvl uh is is fracs from the from the frax pool because of how scalable and and expansionary

contractionary it is with even just a small amount of 11 percent of algorithmic supply uh it's a uniswap top 10 token uh a lot of people have you know heard of frax used it use it for yields no we don't have you know some kind of unsustainable you know twenty percent thirty percent thing fraxes uh you know integrated in a lot of places you can you can farm it lp it use it in normal sustainable ways and it's it's just uh sustainable and scalable so i actually agree with with sam ed maker and and nick which is part of the reason why we design fracs the way it is and actually you know having talked to you know dough and and the terror guys um and you know

it is really unfortunate event and i know kind of you know they're obviously really really in like a bad place right now and this whole thing with everyone and it's terrible right there's there's a lot of wealth wiped out and it's just an awful event but the thing i wanted to say is like they they started understanding this towards the end unfortunately it was uh i think it was like too too late right with the whole btc exogenous asset stuff they actually saw the frax model and were saying you know this is the right model that we need to go because there's no way a zero percent you know sign ridge model from 2014 you know the original signage shares for people that are you know well versed in stable coin history right the the original white

paper by robert sam's and then later you know the three uh coin system with with basis those don't work they don't have any assets on their balance sheet right and i think it's really important for everyone to accept that i don't think that's a controversial thing to say but then the the next question is where do we go go next and i think we're all kind of converging on on agreeing a lot of these these basically uh design decisions sam is there anything based on what's happened that you've learned from this and said we've got to change the way we're doing things to make sure that our stablecoin doesn't lose its pack and i also want to ask you you mentioned it's profitable can you walk us through what that means for stablecoin how is a

stablecoin profitable how does that work so so the first part um because profitability means stable coins have assets on their balance sheet um well if you have collateral right like like frax not if you don't have collateral which is the bad idea that i think everyone on this panel uh completely agrees with so you can either uh deploy that collateral to very safe places or or lend it on places like compound or with things like frax where uh 11 or dynamic amount of the supply is uh expandable algorithmically so you can actually channel signage to certain places you can actually uh lp different places with

with tax expansions get the trading fees from there you can get yields for example from curve uh fracs is entirely on chain there is absolutely no collateral any kind of market activity or market makers or anything off chain everything in d5 is open to frags for programmatic expansion contraction and and uh profitability basically and we have a really good way of being able to do that so that's why we have about a ten percent currently uh return on on balance sheet and signage i think it's a good one okay that's well said i want to ask you guys too about sort of the yield situation that happened with chair and luna and quick answer sam are you changing anything are you going to

change even the term algorithmic is there anything you've got to pivot here so so it's uh you know the term algorithmic is getting to be a loaded term but i want to actually propose something because i think there's a lot of stuff lost in translation here uh i think it's important before people get uh into discussing semantics or or pedantic arguments to keep things quantifiable and and scientific so my own personal uh definition of algorithmic stablecoin is essentially a decentralized stable coin where the primary mechanism or one of the mechanisms of stabilization is

targeting the exchange rate of the stable coin not that it's entirely redeemable right and so it looks more like as a central bank that issues currency rather than a depository bank that actually uh needs to redeem on on deposits and so obviously that that's interpretable right like you you can think okay so cracks obviously has 89 hard assets so that means that those are redeemable at all times but then it also has like a dynamically adjusted currently at 11 that is stabilized through exchange rate but i think it's important to have actual definitions right so so that we can talk about it so we're not going to

change anything other than trying to make frac safer explore new collateral in fact we're expanding to uh credit and and real world lending which is another thing that maker has uh innovated on and that we really like and and everything is uh really great with that so we're looking into that stuff as well but but i i think just making the terms very specific is extremely important as we try to advance as an industry got it got it okay thanks for that sam um other sam i'd love to get your take on make or die or make your dow and die and how that's different from what sam is describing here because there are a lot of different ways to sort of build what from the outside look like a similar

product maybe you could walk us through that yeah sure so uh maker dao has taken the approach of uh always being over collateralized completely um so fracs has gone a little bit further up the risk curve in that regard so they are mostly collateralized but not completely 100 collateralized these are just design differences and i think it's good to have these multiple approaches so people can pick between based on their risk tolerance and scalability and all these types of concerns so i think it's good to have like these experiments as long as they're run responsibly and i think that's the key point i think fox has done a good job of doing their stuff

responsibly so kudos to them for that um yeah so i think that's the main difference uh for us like uh our main focus is die holders we want to make sure that they have complete confidence that the dye peg will never be lost they can depend on that and that that's what we're optimizing for so that is our primary focus got it and circle with usdc is fully backed i guess you could maybe walk us through throughout what's different in your model and what you've built our motto is super boring right it's probably a good thing right compared to those things that we're talking about our motto is very very simple it's full full collateralization you know customers bring a dollar we

give them one usc we keep that dollar they bring one usc we give them back a dollar and we i was talking to nick backstage uscc has has actually a lot of churn is the stable coin that by far redeems um is the most redeemable stable coin like in the in 2021 last year we have redeemed 60 over 61 billion dollars we gave 61 billion dollars back to people who are interested in that just last week we were talking about all the movement in the market right and high redemptions in some other places we've redeemed over seven billion dollars just last week and some people don't understand but your your market cap is growing how does that work the the thing is our perspective is a little bit different as i said

we we want to pose questions to the ecosystem we want to see the next global venmo being built on top of infrastructures like this we want to see robinhood connecting to these things we want to see businesses making b2b payments right they need to connect to this infrastructure and it's really hard for them to accept something that is not fully collateralized like uscc right and i want to get mixtape in this too but catherine for for visa is it only stable coins right now that are fully backed do you ever see a world where a company like visa would start using dye or what sam was talking about with some different models here what would it take for a company like visa to be comfortable with adding or starting to incorporate a stable coin sure i think you know our focus

currently at least is definitely on the fiat back side and we're looking at these digital currencies and how they can sort of potentially create very interesting use cases i think generally speaking you know how we're looking at the stable coin space there's there's the type of stable queen in which you're managing your collaterals on chains so things like maker frags they have all the collateral zone chain and then you have the usdc of the world which is managing those collaterals off the chain i.e you deposit the money in the bank and the way i think we're looking at it for sure like i think by now it's pretty clear not every single stablecoin project is created equally and when that name comes which is stablecoin i think we need to understand what is the risk profiles associated with it and i think you know we can associate that all the

way back to the 08 crisis if anything even the safest asset can have risk and that's something i think going to be true forever right in the sense you know there could be systemic risk in even the safest aaa bad mortgage so when it comes to stable coins we also want to understand what are the kind of again going back to the earlier point which is what are the sort of safeguards and what are the standards or auditing the best practices involved especially when it comes to this reserve management because i think the core as with every protocol project is that you know we want to make sure that when a user want to redeem at par they're able to do that at any moment giving time so there's a huge sort of i think education also that needed to be done in terms of understanding the risk

profile associated with each type of stablecoin or central bank dual currencies as such and i would say you know the way we've been thinking about it is one how is that reserve being managed second you know what is that risk models well who's doing the risk testing how do you stress test the system and the third is how do people with different protocols can respond when there's a price that crisis come along in the sense what is your liquidity management going to look like you know if there's an emergency oracle system kind of embedded in the protocols well how does say the decentralized governance and the community response to such thing i think these are super interesting things for us to learn got it and nick i want to go back to you on this uh crypto markets are going through sort of a stress test right now a lot of

these project projects have not been through a bear market a crypto winter if you will do you have any sense that there are things other than luna and usd that won't work based on the downturn in prices in the moment that we're in right now i mean uh you know luna terra was clearly the the largest uh taking time bomb certainly the most fragile project um it was clear that the anchor yields were subsidized and once that subsidy ended that's how i thought it would fold up there would be outflows and redemptions and the you know they wouldn't be able to stabilize the peg against that backdrop but you're right i mean the whole thing could well have been catalyzed by the

fact that luna was selling off alongside general tightening in in risk markets and and this is a new regime we're entering now as an industry crypto has always existed against the backdrop of uh you know liquidity and loose financial conditions and uh and the crypto industry has never seen a recession right like a in you know with the general sort of macro context so once now that we have this tightening which appears to you know potentially continue for a number of quarters uh it will expose a lot of these bad ideas and uh that's healthy right um i i don't know if i could identify uh the next luna if that's out you're looking for

but yeah i mean uh fundamentally if you're an under-reserved uh stable coin and and you are you know declaring a peg and and uh you know it's a function of your credibility and your ability to raise capital to defend that peg you are paying a target on your back and there will always be adversaries there and you will be challenged by the market and you know major central banks have proven that they couldn't defend themselves fully from the market when they declare a peg um and so what you know believing that uh you know a crypto startup could do what uh you know the central bank of uh switzerland was unable to do is uh is just reckless can i respond to that yes absolutely exam

yes so i i actually agree with a lot of that so the reason uh fracs is actually entirely on chain and so the the clatter ratio is dynamically adjusted with an algorithm is as as nick says you can't just do a lot of these things and then uh hope for it to work out and for for the best right you you paint a target on your back for example when frax adjusts this cloud ratio the fact that it's entirely on chain allows you to see the actual adoption and confidence of locked liquidity how much debt is actually denominated in fracs across all lending markets for example right now 11 of the frac supply

is algorithmic right and if we were not data driven and entirely unchained for example you couldn't actually see what where things were going right there's there'd be no uh actually ability to see how much debt is denominated in ave for for lending facts there's nine figures of fracks there there's a lot of uh borrowed demand that has to actually be bought back right if everyone's trying to redeem that 89 collateral there's actually debt that has to be repaid so that's actual demand you can actually quantify the actual integrations and the actual confidence and the real usage of the stable coin because it's it's a deterministic and programmatic system so

then you can actually build a data driven algorithmic approach to say okay we need 95 percent hard assets or we need 89 hard assets or here's the computation we did actually you can you know run it on an l2 or push it to l1 and actually have that entire thing be on chain as as like an algorithmic cr adjustment this is actually literally minus the pushing to l1 and stuff we we do but we're actually looking to do even that stuff but we we look at all of this stuff programmatically because we know as nick said you can't just willy-nilly this and then hopefully it actually works but if you build an entirely unchained stable coin you can make a deterministic system

that that actually works in fact so far uh you know it's it's been a it's been a success and you mentioned that it's it's built on shane i talked to do quan a couple months ago about this idea and one of his arguments and points was that it was supposed to be totally divorced from the traditional financial system so that made it safer clearly there's so much overlap with at least bitcoin and traditional finance and what's going on with the macro picture are any of these projects that are supposed to be totally immune from what's going on in traditional markets can that ever work are there other examples of this and was that part of the issue the idea that you thought it was separate but it really wasn't and it's tied to all of

this macro noise going on nick maybe i'm hopeful i remain hopeful that we can create uh you know truly decentralized stable coins based on crypto collateral um you know with this sort of algorithmic model um probably over collateralization is the way to go but um the truth is um we're fully um we're fully indexed to you know what's happening out there in the world uh even the fiat convertible stable coins right you're you're sensitive to the treasury market and uh the the liquidity conditions in treasuries uh that's something that we don't discuss very much i mean there's even potential liquidity issues with the most robust fiat convertible

stable coins uh so those are the kind of the gold standard uh but even there there are main risks um especially if liquidity breaks down in uh in the treasury market which is certainly possible it's certainly possible it'd be interesting sam to get you're taking a lot of that yeah yeah so when you're operating at the scale of billions of dollars there is just not enough in crypto native assets to sort of uh build up that supply we know this now um there was some people doing cool experiments like with rye i think it's a worthwhile experiment but ultimately i just don't believe it can scale the only way to do this is to connect into the real world start bringing on chain sort of uh the asset market in the real world

which is like way way bigger than the crypto market caps even even after this massive growth spurt um so yeah i think this is the only way forward i think sam would agree with me i mean they're branching out into real world assets as well so maker has been heavily focused on this from the start and uh this is this is really the only way to run a decentralized stablecoin at scale um there's just not that many options when you get up there and it it can still be decentralized in my view so like i think some complaints are that if you're building things out of sort of with counterparties and centralized components it can't be decentralized i do not agree with this i believe we can just get decentralization by heavily

diversifying the asset classes and jurisdictions and just get a whole big portfolio of a bunch of things where you protect yourself from uh individual tail risk uh this this is totally achievable in my view and this has been maker's focus from the start yeah and joel i'd want i wonder on circle's side too to pivot the conversation a little bit if you want to respond to that but i also want to get your take on regulation because i know circle spends a lot of time in dc any sense that regulators are going to see the headlines around luna and what happened with tara usd and come down harder than they would have otherwise unstable coin regulation yeah before i get into that if i can if i can just respond no i i don't think it's a

counter argument to anything that has been said but i think sometimes we we are getting especially in the last year or so we're getting hung up on this idea that you know there needs to be a decentralized algorithmic stable coin and and but you know it feels like we're starting from the solution and trying to then find a use case for that obviously bitcoin and all these things are amazing innovations and they have super important use cases but but i think i think what we're focusing on is you know can you bring benefit can you bring better quality attributes for the financial services that people use today and yes decentralized organizations they have very clear principles that you know theoretically would bring benefits for those users but actually you know what happened in the last two weeks like it also costs a tremendous amount for for

normal people right and we have to be careful we're trying to do good and then we do this tremendously uh harm to people so to me to me the the perspective that we have instead is let's let's build you know very solid substrates let's build interoperable layers that every financial service any business can connect to and transform the user experience that users have today right the fact that they can't move their robin hood balance easily to revolut in europe right let's let's break those barriers like we are in 2022 it's about time for us to do that so i think i think focusing on the customer problem and focusing on the benefits we can actually bring to the to the population around the world and having this massive substrate that everybody can connect to i think that's that's the focus as opposed to you know

is it this solution or that solution and that's solution i actually think there's space for centralized table coins cbdc's uh augustine coins everything yeah but on the on the regulation piece um i again as i said i don't think we have felt the impact at all of this i think you know the information that i have i think everybody has reading in the news uh the way that the way that you know janet yellen made a made a statement and mentioned ust on her on her deposition uh i think the the uk was announcing uh some some changes with regards to how they see stable coins as well i i honestly think i want to think that it's going to be positive i think i think it's important for us to have regulation right again what we have seen in the last number of

weeks shows that consumer protection is a very important thing for us all to keep in mind um and i and i hope it's going to end up being positive despite uh despite some reaction that we might see because and christine let's get you your take on this i also want to talk about central bank digital currencies but what's your take on regulation and what this means yeah i think to joe's point definitely like regulators are getting more into this and spending time to really understand for example how these mechanism works and therefore what are the safeguards and rails that they should create so definitely a very important question uh important initiative to do and you know we spend a lot of time talking with regulators central banks just understanding the space in general and i want to go back to joe's point because i really agree with what he's saying

because you know with whichever stable coin project we're looking at you know we're trying to derive utility the trust coming the value coming out of it and that utility has to come from the use case in itself and it's also and it's not just you know singly for stablecoin alone i mean it's the same when we're talking about cbdc's as well so you know in my day-to-day work i spend a lot of time talking with central banks and in fact this core aspect of what exactly are these digital currencies going to be used for is so crucial to understand and we like to refer to the to the fact that you know we've been seeing this massive growth in stable point over the past few years like last year you know we had like i think close to six trillion dollars of unchanged stablecoin

transaction volume so clearly there's value being made and being moved and the key is to understand who's driving that and what are we building and one of the key um metrics where i actually like to track is the size of the developer ecosystem out there in crypto i think electric capital sort of you know did a study that last year 75 percent of growth in terms of the number of developers who are like building things on top of these open blockchains and this is great because these are the people who will be staying in the ecosystem even when there's market downturns or upturns you know they'll be here to build and as they're building we're seeing this growing ecosystem of say global fintechs crypto native companies we're building the product from the ground up using digital currencies and we said i think

previously you know money is being programmable and the fact that you everything can be built on smart contract and these smart contracts are uh composable right so in a way the the beauty of i guess dual currencies like stable coins and cbdc is that in some way you can allow developers to start building things a lot faster they're lowering that barrier to entry to start creating a business and we think you know if that utility continues to grow and you know it's exponentially growing then that will be really good and we're very much leaning into these all these future you know different ways money moves so yeah really interesting um we have about five minutes left so i'm going to do sort of a quick around the table here but i do want to get your take on central bank digital

currencies what that means to the private stable coin market and the potential um in that space but maybe we'll start with sam one minute on the clock uh well one comment from everyone that's already said so i i usually have this saying uh that's like all roads lead to frags but i actually think after this pen i'm it's gonna have to be like all roads would lead to frax and maker because of just so much similarities uh we have going and the thing that i wanted to actually say here is like you know we're getting really caught up in like semantic brands over collateralized or like algorithmic and stuff and it's not just over collateralization as like a concept i

always say okay what if maker was forked and there was a thousand percent over collateralized die then then how come someone doesn't do that right right it's because if you did that no one would mint so such expensive debt right maker would out compete it clearly but everyone would love a 1 000 over clarissa stablecoin right but what happens is the market evolves to the right risk adjusted ratio of scalable currency right and so right now it seems like it's between 89 on chain from what for access to 150 or 130 whatever makers but i think it'll converge to what the ideal markets risk adjusted uh preferences and scalability so i'm really interested to see how how these designs converge and how everyone you

know works together all right we'll go to sam for a last word either cbdc's or if there's something you want to hit that uh we haven't talked about yet uh floor is yours yeah i mean cbdc's i don't have strong opinions about that like if it comes on chain like it could potentially be used as collateral it's just a risk-reward sort of evaluation on our end so i mean i don't have strong opinions on that um i am agreeing with sam on sort of this uh converging about where uh where the most optimal risk tolerances with sort of these stable coin designs i think what does set maker apart is our staying on the conservative side just to give

people sort of the most dependable decentralized stable coin available and you know uh the beauty of defy is that like we can have multiple options people can choose what they want to use so i think that's a beautiful thing and i like the optionality that's there got it all right who's next catherine we'll go down the line sure um so actually so again i love courting data but like this year as of the bank for international settlement they do these sort of regular surveys so currently you're looking at nine out of ten different countries uh actively doing research and experimenting with central banker currency so clearly there is a momentum from the regulators and the central banks

also looking into similar very similar types of technologies to be we do think that there's going to be a lot of synergies from what we're learning or what we're seeing already from the growth and the success of stable coins and how we can move that over while looking at central bank currency in fact you know the underlying product infrastructure can support both and interesting enough you know a lot of the central banks these days are actually looking at the future of cbdc they call it cbdc 2.0 which is how they can interact with the d5 in the future so i think these kind of things are very interesting and it's definitely good to have all these sort of synergies being built but i think the key around all of these is going to be around interoperability because outside of the crypto and the blockchain ecosystem we

already have real-time payments ach wire transfers and now we're going to have new payment rails such as the stable point on the blockchain you know central bank currency so to enable all these multi-chain multi-hub all these kind of multi-dimensional things to interpret with one another we have to have solutions that could allow seamless sort of flows to be happening so got it joelle your thoughts on yeah also what it means for for a circle for the private market i'm maybe a little bit less positive on it i think i think i think there there is potentially an application for cbdc's for you know for increased efficiency of of that world you know within uh central banks and banks um i do think though that you know central

banks are they don't come across as the type of organization that would be capable of operating these these uh mechanisms at scale i mean you know fracs maker circle uh it's really complicated to operate um an infrastructure like this and and then i think a key piece which is something that we believe in in a lot which is permissionless uh uh the the you know the the title of the conference i mean we never signed a deal with maker right and maker utilizes usc as part of what they do we never signed a deal with with uh with sam at frax and frax utilizes usc it's composable it's permissionless um i i don't know if cvdcs are going to be like that i suspect there's a there's a huge barrier for for that to be the

case and uh and if that's the case then i think they might play a role more in the backhand and for for interbank use cases and other things but i don't see as something that will get scaled in terms of you know being a better instrument that that you and i are going to use got it and we come full circle back to nick last words for the panel nick either on cbdc's or just your thoughts on stable coins as a killer app yeah i'll be brief i mean uh stable coins are clearly an incredible consumer product everyone loves them they're the killer app of crypto so far no question about that um they've also been responsible for great harms but ultimately what is it that people desire what do they want from stable coins they want transactional autonomy they want

obviously programmability they need it to be digital but you know that you want privacy right you want cash that exists in a digital context no government is going to give that to us there's no government that will allow us to digitize physical cash no cbdc plan is sincere about that so there's no chance that cbdc recaptures the qualities of physical cash in the digital context in a way that actually gives consumers what they want we have to look to the stablecoin sector for that and i hope that it can achieve that all right perfect well everybody and sam remote here sam sam catherine dwell nick thank you all and thanks everyone for tuning in i know we're live streaming too so whoever's

watching at home thank you guys