# The Big Bang of Stable Currencies - James Glasscock | reserve protocol

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2024-10-07
- Duration: 29:34
- Topics: People & Blogs
- Watch: https://streameth.org/watch/yt-CKXVtjT77dw
- YouTube: https://www.youtube.com/watch?v=CKXVtjT77dw

## Description

The Big Bang of Stable Currencies - James Glasscock | reserve protocol

## Transcript

just setting a little timer here hey everybody happy Tuesday it's Tuesday right um cool uh I'm James Glascock I'm from a project called The Reserve protocol uh today we're going to talk about something really fun uh hope you enjoy it it's called The Big Bang of stable coins um I have some unpopular opinions uh a lot of folks out in the world think there's going to be one stable coin to rule them all um and maybe that'll be true in a hundred years but we're in this sort of great unbundling right now everything's unraveling lots of experimentation happening I'm going to take you through it and I think what's possible in this decade the next six years is you're going to see the first trillion dollar stable coin and you're going to see several 10 to hundred billion dollar stable coins um so let's see if I can just get into it for you um QR code please scan it uh if you want to dive into the res ecosystem or stay in touch uh I'll show this again at the end um going to start with the bad news first um so first up the US dollar you've all heard of it um uh it's used in about 67% of global um uh uh exchange today transactions um sadly though about $34 trillion in debt uh when I was thinking about this presentation a year ago it was 31 million on 31 trillion on the slide so it's grown quite a bit in just a year um and purchasing power uh of the US dollar you can buy about two to three times less today than you could four years ago uh and it's about nine times less than you could buy uh back in the 70s uh so um this is not a good Trend obviously um we're in another pandemic uh this is a really big one this is uh pricing increases across 30 countries around the world uh since the 60s uh so you see it's kind of happening everywhere you know I started the presentation with the US dollar but that's not really what this is about all of these uh economic systems are really tied together uh because of the current uh Global Reserve currency um there is some good news though the whole rest of this presentation is good news I think um okay cool this is a really fun chart this is uh techno revolutions uh starts with three phases installation panic and deployment um this is inspired by carota Perez if any of you follow her as a author and researcher um what you're seeing here are the five techno revolutions um the current one being digital information and Communications and I've appended that and put in the and value right the exchange of value the Next Generation value internet of value um and what's really interesting is um uh there's kind of like a revolution happening inside of revolutions here um before I go a little further I I just showed you a chart with a bunch of s-curves and you might be familiar with that or you might be wondering what is that uh so this is just a quick explainer on how s-curve adoption Works uh starts with innovators and early adopters early majority late majority uh and on the laggards I'd say in the space of crypto right now we're somewhere between the innovators and the early adopter phase we' barely barely started um as much as all of us love the space and love the excitement the truth is 99% of the world is not using it yet um I can't wait till that happens I think uh you know maybe we'll see 10% of the world using it on a monthly basis uh this decade which would be really cool there's a perfect storm happening this is uh just an over lay of that debt curve on top of uh these technological revolutions um let's see if I want to make sure I didn't skip that yep so what do I mean when I say revolutions inside of revolutions well really I think there are like five forces that have been happening since the 70s um one of them is digital you know this idea of being able to manipulate electrons instead of atoms um the second one kind of started in the early 1980s open source um where you only have to solve each problem once you share it with anyone they can Fork it and build on top of it uh which leads us into composability uh the idea of remixing software or really anything like Legos uh right could be e-commerce could be videos on YouTube for that matter um and then this other um kind of phenomenon which which started you know in the late 2000s uh blockchains you know being able to uh coordinate permissionless work uh and prevent this double spend problem um there's another um sort of Major Force here which we're all aware of it they've been working on it for over 50 years but for the mass Market it's only started this decade which is AI um that gets really interesting because now we're talking about machine economies um which are kind of freed of meat space physics um um AI is not going to be using Fiat money that's my bet let's see what are the impacts of this um really democratizing the tools of production democratizing the tools of distribution and what that allows is the ability to hyperconnect supply and demand this applies to a lot of different Industries I'm going to get into it including what I think it will also apply is with stable coins and with digital currency there's a book uh actually it was an essay in 2004 it became a book in 2006 it's called the longtail um I thought it was pretty cool back then it's really about this idea of the future of business is about selling less of more um at the time this conversation was applied to a lot of these digital uh you know do companies folks like Amazon and Rap City Music which was a predecessor to uh it Tunes at the time um but businesses really being able to build really sustaining thriving ecosystems uh without having uh all the hits um although you know if you were to go to Amazon today they have the hits and they have the the niche Brands as well um what is the long tail so it represents the significant demand for Niche products that emerge in digital markets um there's the head of the tail which is the vertical part popularity uh and then the long part uh that on the x-axis there which is the number of products um and I'm going to just show you what that looks like in a few Industries um before I get there um I already talked about this but um there's these three expansion stages for the long tail uh the first one is democratizing the tools of production second one is democratizing tools of distribution and when you can do that when you can do that in digital Networks you're hyper connecting supply and demand wherever it is in the world uh that becomes really interesting because you could you could build a 10 billion economy which as a standalone could Thrive and be sustainable over time it's something you can do now and you'll be able to do in the next few decades that you couldn't have done 20 years ago 20 30 years ago um probably the closest to it would be something like uh Starbucks uh uh rewards programs uh the currency system in Roblox or World of Warcraft or or something like that so there have been some of these on smaller scale uh in some of those closed networks but you're going to see a lot more of that in the future um what can other digital Transformations uh teach us well uh I'm going to just go through like shopping broadcasting and mobile apps as an example so uh again we have the long tail you know back in the 1980s there's tens of thousands of stores on Earth um uh lots of people would go to the shopping mall and all the stores were in one place that was the most convenient way to find whatever you wanted to shop for the world has changed a lot since then now there's tens of millions of stores uh maybe more depending on how you count them uh any product any store is at your fingertips um just real quick on on the Shopify on the uh e-commerce side uh Shopify alone I think has about 1.7 million stores on the platform today um four or five competitors make up the rest of that um not counting you know Etsy stores and Amazon markets and so forth next one is uh video broadcasting business I came from this industry uh back in the day before crypto um uh in the 1980s there were about 100,000 hours of video content created per year today it's about 300,000 hours created every day Tik Tok YouTube all that stuff um so you're seeing these kinds of platform businesses enable all kinds of folks to either be successful professionals or just be hobbyists uh one thing that is really interesting about um the long tail is it tends to be about 0.1% that really make a living from it so it's not it's not everyone thriving off of it most of us are consumers of it but it's a really small amount maybe 0.1 to maybe 1% that build you know that become the Mr Beast on YouTube or the biggest e-commerce store on Shopify um do one more example here phones uh mobile mobile apps in the 1990s there were two apps you could talk on the phone or you could text your friend today there are millions of apps there's two million apps in the Apple App Store alone there's even more than that in Google Android so this phenomena that is happening in lots of different digital ecosystems it why not why shouldn't it happen with money um what happened was free tools creativ infinite distribution and incentives and you're seeing this happen across all kinds of crypto ecosystems and I'll talk more about stable coins here in a minute but um but the mere fact that there are 15,000 plus tokens on coin market cap gives you some sense of what's happening out there um lots of experimentation obviously some of the projects are questionable but uh nonetheless it's an interesting leaderboard for creativity experimentation and you know capitalism let's go back to money um so um a lot of what I'm talking about here is about kind of I think analog versus digital um the money system the the money system most people around the world use is an analog system um it's uh even even today's most popular stable coins the duopoly of tether and USD these are the equivalent of the New York Times website in 1996 being a PDF copy of the newspaper right these are first generation stable coins will people care about first generation stable coins in a decade I don't think anyone cares about first generation um internet companies anymore they've all mostly been absorbed or dissolved or or whatever um new Innovations take their place um so what's possible between analog money and digital money I won't read through the details of of the slide um other than to maybe call out you get a lot more programmable features with digital money you can do some really interesting things with privacy and revenue sharing and asset backing you can do it all on chain um there's no uh CEO there's no uh office there's no issuer it's all done in smart contracts and that becomes a really interesting mechanism for building a future world currency um and and maybe thousands of experiments before someone lands on you know the so-called winter there um yeah I think I'll just say on the last piece here permissionless creation and composability uh unlocks free market Innovation to me that's one of the most exciting things about next Generation stable coins uh that operate on chain and can be created by anyone in this room for free in about 20 minutes um this is uh vitalic stablecoin categorization he uh was part of an essay at the end of 2022 it's a nice framework for looking at like what are the different categories um I won't read through it but you can kind of see the three main categories that he highlighted centralized stable coins uh Dow governed rwa backed stable coins and uh governance minimized uh Crypt back stable coins it's um one of the cleaner sort of organization tables I've seen for stable coins so I like to include it here uh a lot of people don't know this there's already 200 stable coins um about a year ago when I was thinking about this presentation there were less than 100 so it's growing really fast um again not all of them are going to make it most of them won't but we're seeing like some really cool Innovations along away um and other folks will come along and built on top of those Innovations or those failures um so that we can ultimately have a really resilient currency that lasts over centuries um I think this is like a really important part of uh where the future of stable coins is going they they all have different jobs to be done you know we're kind of coming off this analog Paradigm where uh it was just about unit of account medium of exchange and store of value uh and you and it had to be simple right it was an analog system uh kind of superficially set up with network effects um you know if you dig into kind of the history of the US dollar when they uh you know when that debt curve went way up uh that was about the time that we uh kicked away the gold standard um and uh had an arrangement with uh uh OPAC on oil pricing uh which has given the United States and the dollar uh quite a bit of network effects globally um and sometimes that's been abused sadly um but here's a bunch of stable coins with different jobs to be done I'll highlight a couple um die you know uh we're all familiar with one of the first stable coins for onchain natives um tether and usdc were both uh uh you know centralized custodian stable coins both of them kind of the same Playbook initially Bol onto an exchange for Network effects um usd3 here at the bottom is a cool one this one's actually on the reserve protocol it's a yield bearing Blue Chip stable coin index uh it's got some over collateralization protection for like Bank runs and Black Swan events which is nice um there's even more uh stable uh jobs to be done for stable coins uh just highlighting a few more here curve USD which launched last year uh it's got a really interesting uh borrower friendly uh soft liquidation engine uh that people are liking and the protocol has already been forked uh at least once or twice um so it's it's exciting to see that take off so lots of different stable coins each with specific jobs to be done it's possible we'll all figure out what the right jobs are to be done in 20 or 40 years and maybe that will all land in one stable coin but in the meantime just going to see a incredible amount of experimentation so um how do we accelerate stable currencies that retain their value over centuries um the answer is uh lots of experiments and not all the experiments are going to succeed um this is these are our tokens created on the reserve protocol that's the project I work with um call them next gen stable coins what do I mean by that um really these five functions that are all on chain um asset backing on chain programmable Revenue sharing on chain uh creation mint and redeem is all on chain uh default protection on chain and and lastly governance by stakers on chain um quick background on the reserve ecosystem now on three chains ethereum arbitrum and uh base about $150 million of tvl and over a thousand of the these R tokens have already been created on the reserve protocol um now are is everyone using the Thousand no but probably about 10 or 12 of them are pretty popular in different Pockets um of experimentation this is uh kind of unboxing an R token uh specifically uh the web $3 usd3 launched earlier this year uh it's been growing quite a bit um it's back buy a basket of usdc PayPal and die uh you might wonder well why are we why are stable coins being created back by other stable coins well what you get out of this is some diversification uh and overcollateralization protection um there's a future though where our tokens could be backed by a basket of a hundred different assets Commodities stocks bonds real estate um thus far today there's not enough of those assets on chain with sufficient liquidity to build really resilient stable coins but that's what's coming uh over the next 10 years um this is the URL if anyone in here would like to deploy their own R token it's it's just app. reses serve.org deoy um it's kind of like a uh you know what you see is what you get type of interface you don't need any coding experience you choose your collateral plugins you choose your Revenue new sharing if you want to launch a stable coin for a new video game uh or a new community um or help a Sovereign Nation um the tools are right here it's free to use um our tokens all require collateral plugins um here's a sampling of a few that are available uh in the protocol right now um uh some names you'll definitely Rec recognize there's about 60 plugins uh available on the our token deployer usually you want to build stable currencies with stable assets um at least on the reserve protocol I I'm familiar with lots of other designs out there that are doing some cool stuff with perss and so forth um but just to actually want to highlight one more thing here what's interesting about this yield bearing basket for usd3 uh I believe token Bryce uh few day or yesterday um talked about Blue Chip blue chipor it's a stable coins rating agency um the folks who deployed usd3 wanted to build a blue chip b or better asset basket uh so that's why it has D PayPal USD and uh usdc in the basket you can go to Blue chip. org read the risk ratings there and find out why are those rated to B I think tether is rated to D or an f um and you'll find other interesting ratings for other uh stable coins uh on blue.org um who might deploy these uh new stable coins in the future all kinds of folks uh you might just sort of think usually it's got to be uh you know a large protocol or a government or somethingone like that but the reality is it can be any of these groups here on the screen I know my time's ticking and I want to save time for some Q&A so I'm going to skip through um lot going on here on the Big Bang but I talked about these five forces earlier digital open- source composability blockchains and AI um and really uh these forces around like free tools and creativity and permissionless access this is um this is really what's enabling uh this idea of a stable coin Big Bang U these Tech political and socioeconomic uh factors what I think is probably possible um this decade is you're going to see thousands of experiments uh and as I opened with we'll see see you know the first trillion dollar stable coin we might see we might see four or five trillion dollars of stable coins by the end of this decade which would be about 5% of M2 money um this is a fun uh little staircase of how to grow traction for stable coins I spend a lot of time thinking about this um you know where do you start and where are you going with this and uh for our tokens it's starting with onchain Native people who uh really believe in smart contracts believe it I don't think I have to convince anybody in the room but there's a whole bunch of folks out there that think uh you know the the the architecture of tether or usdc is the way of the future um you know centralization and trusting people and things like that um so as we work our way up the staircase here you'll see it going from onchain natives uh to the rest of the world you know a lot of people that are not on chain yet um two that I really want to highlight at the top there are the difference between growth industries and slow Industries um those are pretty interesting and it'll make a little bit more sense here on the next slide um this is just an example of where a few stable coins started the US dollar starting with government um tether and usdc both started with centralized exchanges uh that's how they got their Network effects and of course D started with solving a problem for onchain natives so stablecoin go to market can start anywhere in this stack and this drawing is uh probably doesn't include you know uh a lot of other really interesting ways to think about it anyone who has ideas about improvising on this by the way I'll send you the slide deck and I'd love to have your ideas uh QR code uh if you want to deploy your own R token drop into the Discord for Reserve we can help out in lots of different ways there's also a grant program um will help you know developers protocols entrepreneurs anyone who wants to Tinker and build uh we'd love to help you uh how about some questions yes uh let's get you a microphone if that's okay I just want to make sure everybody else in the room can hear your question uh hello y uh thank you for the presentation uh do do you have some uh uh use cases of uh our tokens being deployed and actually used uh for something yep good yeah so the question is uh use cases for art tokens being deployed uh first one that launched on the protocol February of 2023 was the electronic dollar it was launched by the mobilecoin blockchain folks uh mobilecoin is an a privacy L1 they uh their use case was they're launching a remittance app um to be able to send money anywhere around the world privately in less than 5 seconds for the cost of a quarter of a penny no matter the transaction size so they launched it it was originally called the Mobi app it became a new name called sense senen TZ you can kind of Google that uh subsequently uh another project called ugly cash has adopted it um and you know that would be like one example of electronic Dollar by the way the over collateralization bankr run mechanism I talked about uh electronic dollar launched on February 23rd of 2023 March 9th and 10th usdc uh there was a run on Silicon Valley Bank big dpeg event while all the other stable coins depending upon usdc were waiting on a Regulators to back stop the bank and B the banks to open on Monday uh electron dollar recer itself no middlemen by breakfast time on Sunday morning it's pretty cool right you don't there's no Dow decisionmaking process there's no middleman who might make bad decisions during a sort of panicked moment uh it worked really well but yeah that's one example of the electronic dollar there's there's several others there's like yield bearing usd3 which I showed that's picking up steam with like yield hunters and DOW treasuries um uh and then there's even you know eth stable Coins eth Plus created on the reserve protocol it's an LST index that pays the holders about 3% yield on chain gives them some diversification thank you any other questions yeah we got one question right here I think yeah hi thank you for the presentation was super interesting uh so when we when we are talking about stable coins um and the evolution of money in general um we should also focus a bit on what the government's doing I actually only a few days ago found out that the IMF have launched their own CBD uh is in the form of some I don't know some Global Currency that they're working on so I guess my question is what do you think about uh uh Central Bank digital currencies and how how do they Rel relate to stable coins and their evolution yep yeah so the questions about cbdcs and where that might go um last I really dove in uh there was about a hundred experiments 100 or more experiments going on around the world different governments uh looking at cbdcs um they Central Bank digital currency they kind of have different definitions depending on who you talk to uh and one of the big concerns for you know some of us are privacy uh right um that's a little scary to think about you know a government that has control over your money system um but I have actually seen some cbdc experiments that are working with ZK privacy technology to be able to protect the users right to be able to prove to provide privacy to the users yet prove to the government um that the money is not being used for any sort of um nefarious activities um I think um I have a feeling governments are going to move slower than the innovators at eth Belgrade uh and in the current crypto ecosystem um it kind of reminds me of like the early days of Bitcoin uh you know in my experience kind of like up till 2019 people were still saying the government's going to shut down Bitcoin you know you guys might have heard that you know and then they were talking about all the other ways that Bitcoin was going to shut down and now you know we just have an ETF and everyone's jumping on board so uh I think and I'm hopeful that uh you know the things that are happening in the ethereum ecosystem and with stable coins in particular I'm hoping the Innovation will really just kind of outpace um and you know there's going to be some Growing Pains along the way but this is how we learn and this is how we get to the next better thing um so yeah it's kind of what I'm hopeful for we have maybe one last question maybe I think we have time for if anybody has one more question it appears not uh okay thank you everyone I appreciate your time