Welcome to East to E to E to E to E. All right, guys. Nice short break. Um, we're going to move on with Tyler Spalding and on this topic using online collateral for any app. Take it away.
All right. Thank you. Uh so I'm Tyler. I'm with the Acronym Foundation, a foundation uh that I created a few years ago that just focuses on uh contributing to various web 3 projects, open source software. Um I've now been in crypto uh working on various uh projects for about 14 years, I guess, at this point.
Um the most recent one was something called Flexa, if you've heard of it. uh it's a payments network and it's now the the world's largest pure digital payments network. So we've seen a lot of success with that. Uh so if you have any questions around uh payments uh and even privacy based payments it's something I've been involved with um in various protocols or projects for years and years and then especially anything around like retail acceptance even B2B payments uh is something that I'm could talk for weeks about. So if there's any interest in that.
Um but now in in building out some of these projects at Acronym uh we have all this payments experience and the way that we put uh Flexa together. We use this unique collateralization mechanism to allow any app to permissionlessly access the network. Um that's kind of its core functionality of how it literally worked. And we started seeing that there was uh this sort of larger opportunity um to have like this extensibility of collateral and how collateral is used. Um when you take a step back at it uh it's actually a much massive opportunity than we really ever expected over a quadrillion dollars.
uh when you start looking at secured credit and this very very macro level of why this can become interesting and how this starts uh interacting particularly with tradi and then how that boils down to like just real world usage and that's something that uh myself um I've had just a really strong focus on uh since the very beginning is how do we use some of these technologies to actually then have them be like literally used by people businesses um to where they have a strong competitive advantage uh over um incumbent technology. So uh just some of the forms without going into too much detail uh these are all very common uh one of the largest markets in the world uh repo agreements if you guys are familiar um even as simple as like cash borrowing from any sort of collateralized asset uh securities lending um various forms of derivatives trading even how the derivatives themselves are even formed um then the contracts that they're then based on. Um but it really gets uh this is really the more of the crux of the issue and that in in creating all these markets and these products uh collateral management is surprisingly much more complex and challenging than you'd really ever give it credit for. Uh so if you have an asset trying to figure out uh what the asset is. So this verification component what what is it?
Where is it? What is the condition of it? Is it rehypothecated? what are some conditions that maybe aren't as publicly obvious um to the condition or even the the legal state of of that asset? And then now even on the perfection side, you have to then if you want to use this as collateral, you want to extend some sort of lean or security interest against that asset, which is also so much more complicated uh than you would think.
Like so once you can verify that an asset exists, how do you actually put in some sort of contractual arrangement um either through through code or legal agreement or to to enable yourself to actually claim that asset. And even if you do all that well, uh in the event of default, if you have to enforce that agreement and now take ownership of that collateral and literally receive it is also a lot more complex. When you look at things like they could be held in custody accounts, how you gain access to that, uh how you transfer something into a new beneficiary, if it's a physical asset, how do you now maintain like control of that? How do you literally uh find it, collect it, and then not only that, then you have to liquidate it. And if you're trying to issue credit uh for someone, these are all things that you really don't want to uh put so much time and effort into.
And what happens then is it just limits the overall application um of collateral usage. And so despite this being one of the largest markets in the entire world around secured credit, uh it's actually a lot of it's very minimized because of all of these conditions, they try to put uh much stronger um sort of guard rails around it. Uh and it minimizes the overall versatility of collateral. So even just with all of that and that that background, you can now see how crypto or any sort of decentralized or public network solves all these these questions like or addresses these issues fairly fairly well. Um so it would make sense now that we could build some sort of a protocol um that could address that and make this a lot more trustless.
Um and it sort of makes sense too when you look at any sort of layer one or even a contract layer two uh we a lot of a lot of times measure uh the resilience or the value of those networks um in total value locked right so it really is how much how many assets are there what is the value of the assets that's so we can use them as collateral on this network and that ends up being the primary network uh primary metric so we created something called anvil uh which is a collateral management protocol that now allows allows you to issue secured credit to any party. Um, this is just the the dashboard. Um, the way we like to think about at least the letter of credit component, um, uh, people are probably not familiar with this anymore. Uh, these physical checks, if you're old enough to remember these actually being used, you can literally just think about it as some sort of a bank check that is issued to someone as the beneficiary. In this example, it' say, "Here is some uh bank check equal for uh€10,000 euros, and if you receive this, you can do nothing with it.
You could rip it up or you could take it to the bank and cash it, and they should, you know, in theory then give you the 10,000 into your account." So, what we've done now in Anvil is just replicate this process just all through um the contract itself to where I can issue a contract state that would allow this to become enforced uh backed by some sort of collateral asset. So, uh, the letter of credit process is actually pretty straightforward, but there are, um, lots and lots of edge cases that I won't go into all the details of the mechanics, uh, here, um, but I'm very happy to talk to anyone if there if there's interest, but you basically can create a letter of credit, um, in the contract based by some sort of collateral, and then you can issue that, um, that letter of credit uh, to a beneficiary account in which they can redeem it uh, if they so choose. We also then have um a collateral pool mechanism. So it still uses the same collateral vault, but this just allows for like many to one uh collateral situations.
So it turns out a lot of times that people don't want to collateralize their own transactions. So particularly in payments um if you want to make some sort of secure payment uh you don't want to have to fund the collateral yourself uh before making any of these sort of transactions. um or even uh more autonomous situations like smart contracts and bridging. You don't want to do that yourself where others will gladly do it for you in exchange for some sort of a fee. Uh and a collateral pool would allow you to do that in a somewhat similar mechanism.
Um the overall features of it again just having it being fully transparent. Uh it's completely free. Um so there's no cost at all for anyone to be using this. um the security element of like now if you get these credit, it sort of like enables you to become a bank to issue this credit. Um it's very uh straightforward for you to be able to use.
Um and the whole benefit of this is that now collateral can be used crossplatform. It can be used online, it can be offline, it can be within contracts, uh kind of intracontracts. Um and now it just allows for just more collateral versatility, especially as we start having various assets. um that have like inherent yield generation. It's something that you can hold and now be able to gain credit to various apps um kind of across an ecosystem without moving your collateral around or having to take risks and moving it into different protocols.
So the core use cases um that just bubble up really quickly that we've already um kind of gotten use on already. Uh we've spent probably around 18 months developing the protocol and all the contracts. It's only been live for about uh two months. Um but we're already I think a top 90 uh overall uh DeFi protocol in terms of TVL. Um so we were close to around 100 million in TVL already in the first 60 days.
Uh based on real world use and actual like traditional companies even using this uh one the traditional loans everyone's trying to receive uh you know loans against their Bitcoin or other assets and there's lots of other DeFi protocols that do that. Uh we're working with a company now, a licensed bank uh bankish uh in the Netherlands that will actually allow you to create an anvil letter of credit against whatever your assets are and they can then fund um euros into your bank account. Takes around like 30 seconds, 60 seconds all in on their process for you to literally receive the cash into your account. And the thing where this gets interesting uh to me and and part of a reason why we did this is that in the traditional loan aspect from a privacy perspective um sure there is going to be KYC there is going to be a counterparty there's someone issuing the loan but now you can actually do this without giving employment history without how much money do you make without where have you lived and all of these other sort of loan applications that can be if you ever had to do that before uh can be very honorous and so that essentially goes away. So that is not a part of the process.
Now in the partners we have they can issue cash loans and they just say issue this letter of credit uh to us and that's it. There's no more application. So the concept of applying for a loan essentially is is moot which we've been really excited to now see in the real world. uh a lot of other uses around like DeFi credit through exchanges where we've allowed for uh margin trading on exchanges where people can hold their assets within the vault and now deposit different address different assets on exchanges and be able to trade on margin uh which we all know the industry that we're in. So we know that's a big component of what a lot of people like to do.
Uh we enable autonomous asset bridging. Um, so if you were able to create a letter of protocol, a letter of credit within a protocol itself, um, it's now collateralized. So you could essentially bridge from, uh, any consensus mechanism to another, uh, instantly because the collateral is there now backing it. And then the payments use case I've already talked about previously. Um, that is a fantastic one which now Flexa is actually using as well.
So they're using that uh, anvil as the protocol itself to collateralize their transactions across the network. uh which we've been really excited about. So the yeah the main idea um that I just want to really express around some of this stuff is that um when it comes to privacy right it really just depends on for me it's the it's the use case it's the applicability it's what what is the situational context right you can't have privacy in literally every single thing that you do because we do have to live in the real world and maybe there are the the really really extreme fringes that enable you to do that and live completely off the grid in every way that you possibly would like and I can respect you for that if that's uh what you'd like to do. But the reality is there's probably somewhere in the middle. And so how can you get the most out of some of the societal elements and through travel and other business applications but with revealing the least amount of money least amount of information possible while still maintaining reasonable privacy.
If you're trying to make transactions maybe financial transactions we have, you know, you could use uh various tokens for that. We have uh like Dash and Zano are here, right? Two great projects that that enable that. But now if you want to get things like where issuing credit uh through a protocol or through a company or through a bank where you can now be the bank, we think this is a way that does that. Um which allows the least amount of information and the least intrusive information possible.
So we've been really excited about so far and the growth that we've been able to see. Um that's just uh very quick documentation. There's so much more. I didn't get into any of the technical details. Um, and then if there's anything else, just you can shoot me an email and that would be it.
So, thank you. Quick round of applause for Tyler, guys.
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