Where crypto has product-market fit today

Transcript

[Music] [Applause] hello thanks so much eth Prague for having me my name is Amanda casset I'm the CEO of Serotonin which is the largest web 3 native marketing and other services firm uh was Chief marketing officer of consensus before that from 2016 through 2019 but I'm actually not here to talk about any of those things or to talk about anything that I have bags in or

that you probably have bags in um and my excuse for that is on a panel uh vitalic said this morning that if there's anything that he wishes he could accelerate in our movement it's the idea layer that asks the big questions asking in the 2020s what is ethereum doing and that's what I wanted to ask with this talk which is really a thought experiment so thank you so much for indulging Me by going on it with me so it's not just a thought experiment it's also a trip down memory lane uh I

started working in this space nearly a decade ago first learned about ethereum in 2015 joined consensus in 2016 took this photo in Shanghai of Devcon in uh that fall and at the time we were super excited about ethereum we were talking about very specific issues and topics within ethereum this is the consensus retreat in Bali in uh September 2016 had a lot of great conversations and here's what we were thinking about we thought we're building a new foundational economic layer for reality a new global settlement

Lair we thought there are going to be payments in tokens like Bitcoin and eth in fact the first time I came to Prague in 2018 for Devcon I went to this spot which some of you have probably been to and I bought a coffee and a t-shirt in Bitcoin and it was super cool because we felt at the time like they were one of the first to adopt crypto payments and that there would be many more later and that we would all be paying for pizza or paying for coffee in in crypto we thought there'd be a unified blockchain identity and reputation if you remember all the work we put into things like uport at consensus you know

you know that we believe this uh and that we would all by this point have a single blockchain ident enti as a store of all of our reputation and logins that replaces like a Google or a Facebook login then this is probably the most fun we thought there'd be Enterprise adoption through private and Consortium chains so like private instances of the ethereum blockchain remember like R3 Corda uh the uh hyperledger that stuff um that there would be blockchain uses use case say with and without crypto so we're we're thinking about supply chain uh all these different use cases of

blockchain without crypto all these big companies we like blockchain we don't like crypto that was the thing then and then Financial inclusion for the unbanked and obviously reality has exceeded many of those expectations uh it it's been different than what a lot of us thought and I can't speak for what everybody thought I'm just kind of covering what I thought everyone thought um but we started thinking about this new foundational economic lay and what we got were the L1 protocol Wars this race to the bottom of the stack that's yielded a lot of infrastructure relative to Applications once you prove out to

VCS that they can get a return on their capital for an L1 or an L2 then suddenly everything makes an L1 or an L2 and we end end up working on this at serotonin uh because if something isn't differentiated enough as an L1 or an L2 we won't work with it because there's no appetite in the media to talk about and to cover it they want to talk about applications they want to talk about real use cases and people being affected by these things uh they don't want to talk about more infra so investors are investing in more infra than we can get anybody excited about um payments and tokens like Bitcoin and eth payments are

happening in stable coins um instead of a unified blockchain identity and reputation we just heard from worldcoin there are a lot of really interesting efforts right now to bring identity in various forms for various reasons on chain like world going disco but we got a lot of web two style centralized Exchange accounts ens names are aggregating a lot of this um so we don't have private chains and Consortium chains um not really uh we have some Brands adopting web 3 through nft some of those were shortlived some of those are building real projects and communities we get folks like micro strategy putting Bitcoin on the balance sheet we get fex this cycle using crypto like the robin

hoods and paypals uh and then we have ETFs so we have these nice little wrappers for bringing in a lot of value without actually bringing in a ton of dii users and um blockchain use cases a huge amount of where their's product Market fit and I'm actually not going to focus on that in this presentation is for people already in the crypto ecosystem serving them with new Financial games for people that are already doing things in crypto which is also valuable and interesting and speculators are serving an interesting Market function um regulatory Arbitrage defi games ethereum is this tge platform democratizing anyone's ability to create a token um but that's really a use case

for people that was generated Itself by crypto rather than solving a problem that pre-existed crypto Financial inclusion for the unbanked now that's a little bit different actually we at consensus went to the UN in 2017 um and we're talking about a lot of these ideas a huge amount of the world is currently unbanked um and those people want to do various kinds of economic activities could it be possible to do some of those things on the blockchain um but this didn't start happening in 2017 it actually really started happening more like

2020 um this is a chart of the Turkish L versus the US dollar uh and you can see that starting around there's decline but starting around 2020 um we get significantly more decline here's the Argentine peso uh declining against the US dollar and this is accelerating in 2020 so we get a lot of these smaller cap Fiat currencies uh pursuing monetary policies that led to uh devaluation against the US dollar all at once and it makes you wonder if we have this Paro principle um and if the larger cap Fiat currencies eventually kind of

eat the smaller ones and everything Aggregates to few Victors are we going to still have small cap Fiat currencies or are they going to start pricing themselves in US Dollars and you can see where's all that market cap going people in these markets that want to transact and price their transactions in US Dollars what are they turning to in order to do that well the answer 70% of the stablecoin market and the uh dominant player in the Emerging Markets is tether usdt whatever you think of tether that's the that's the case um and you can see from that graph in 2020 how that started picking up um and picking up the slack from from some

of those markets that got destabilized and the tether CEO said himself usdt can become as big as all Emerging Market fiat currency market caps in my opinion putting them all together that's wild and so I'm going to do something even Wild er uh that gets us to an even larger total addressable Market back of napkin calculation so we're going to start with the roughly 100 trillion USD denominated Global money supply um it's probably a lot bigger than that right that's the stated Global money supply denominated in USD then we're going to subtract the stated circulating money

supply denominated in US Dollars of the four largest fiat currency roughly um so we're going to uh subtract USA Euro Zone China Japan and then we're left with about 20 trillion USD denominated worth of potential stable coin Tam if stable coins replaced everything but the top four Fiat currencies obviously a ton of ifs in there not saying this is going to happen remember thought experiment uh and this is reported figures but interesting so when we think about potential product Market fit here this is this is where it could happen um when we first went to

the UN in 2017 we were talking about how um in a lot of Emerging Markets instead of copper wire technology for phones folks were going straight to straight to 3G 4G now 5G uh and similarly it's too expensive for Trad Banks to go into a lot of these areas it's very uh heavyweight infrastructure that they have to put in and so it might make a lot more sense for folks to start transacting in USD for example denominated stable coins in these places instead of waiting for that kind of heavyweight Financial infrastructure to come in which it may never make sense to and so this is not the only Arena but

kind of by the definition of this talk a really interesting Arena to explore where crypto in the 10ish years I've been thinking about it has actually found some product Market fit for its original stated use case exactly how it was originally framed um this is a photo I took photographers me at a uh gaming conference in Sabu in the Philippines that people were dressing up for as if it was ComicCon in the US if you're familiar with that and they were learning there how to be Discord moderators how to do quests how to earn rewards in games I heard some interesting stories about how during the

height of axis's popularity which is still extremely popular um how people were climbing to the tops of trees to get better service in order to be able to play and if someone is climbing to the top of a tree to use your product that is product Market fit um so these folks are really interesting and as we build products it's interesting to know about them and what they're up to a lot of them don't have metamask or a self- sovereign wallet yet they may in the future they have Mobile accounts with local centralized custodians everyone has telegram people are really communicating on telegram people who started their telegram

account in the US don't see this but everyone that started elsewhere has been pushed a ton wallet which is a self- sovereign wallet inside of telegram they're basically going for WeChat but not not you know governed by any country fully integrating payments with messenger social apps um people are spending their time uh playing Guild games like axi it maybe it's escapism maybe it's a hobby maybe it's while they students a lot of the people in these audience wearing those uniforms or students but people really play these Guild games people do quests and airdrop farming and possibly there's a hardware thing being added again no bags but I've noticed these guys J that are making a phone that is an airdrop

farming focused Hardware phone that's targeting these markets so that's interesting and it's not just in places like the Philippines there are all kinds of markets where these Trends are happening this is pix in Brazil which implemented in 2020 uh these QR codes that let you uh cash out and do payments in stable coins there are currently 60,000 ATMs in Brazil that let you transact and take out cash on usdt basically creating a link between the official fiat currency system and the stable coin system and part of picks implementing this helped them become the country's most popular payment method by

last year so we're starting to see this in lots of places what does it mean uh and what does this mean in terms of building into pmf building into places where crypto has some pmf um um could this be an important gateway to Native crypto and defi uh after people get onboarded maybe on mobile maybe on a local centralized exchange maybe after people get their first metamask or other self- Sovereign Wallet account is there a second thing that it makes sense for people to do and we have to think about these people's lives right if your fiat currency H is it has decreased over the last few years 80% against the dollar do you care about 4% 5% % 7% yield possibly not like there you might need to think

about different kinds of games different kinds of next steps in order to Target this particular audience but surely there is a next step it can't just end with stable coin payments is this the biggest export of US dollar denomination all of these folks instead of denominating their various transactions in their own currencies are choosing to denominate them in something pegged to us USD and tether itself is buying t- bills every time you do a uh a transaction that involves usdt so that's buying US debt and and I think tether is the largest holder of US debt right behind

Germany uh so pretty big and that's interesting because China slowed down its buying of US debt and stopped buying as much and so there was a need to pick up the slap and now folks in Emerging Markets using tether stable coins for payments are picking up that stack slack and buying uh US debt and so has blockchain where it has achieved product Market fit in this Arena basically become a transport layer for exporting US dollar denomination and the buying of US debt interesting maybe is it a path to telegram dominance telegram is where a lot of these users are it's uh the sixth most downloaded app it's on track to

have a billion users within a year uh and now has native crypto components and is tether the best business ever uh they made 45 billion in Revenue in q1 of this past year which isn't as much as some other of the largest businesses ever uh but if you're in the business of exporting the US dollar over blockchain rails it's a cool business to be in and if you break down that Revenue per employee uh they're pretty much much ahead of almost everybody so that's interesting maybe um I think it's not the end we're going to find product Market fit in new places in the future uh this was Shanghai 2016 our team at serotonin and I bet many of you

are going to be heading to Bangkok in 2024 I'm sure we're going to learn about all kinds of new use cases and applications and places where we're actually finding fit in other areas and maybe some of them will even satisfy some of the original uh goals and aspirations we had uh in this in this movement in various new ways so this is certainly not the limit or the end uh and very excited to learn about what those things all are um super quick on us this is our team when we were in Bogata a couple years ago we've grown a bunch since then we do marketing uh also uh strategy advisory legal all kinds of

different services is in web 3 we spend out about one software company per year I wrote a book called Web 3 marketing uh currently out in English but about to come out in Mandarin it's on Amazon please do buy it and read it if you're interested in that got handles over there if you want to stay in touch uh but mostly thank you so much for humoring me uh through this uh thought experiment which I hope was fun and interesting and in the spirit of uh vitalic concept of of asking big questions and creating an ideal there thanks everyone thank you very much

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