The Money Movement / Episode 17

Episode 17

USDC at 1 Billion, What's Next

Summary & Key Takeaways

Full Transcript

This week on the Money Movement we’ll be talking about USDC at 1 Billion. USDC has become the fastest growing stablecoin in history, seeing over 200% growth over the past six months alone, and has become a de facto standard as a trusted, compliant digital dollar format and protocol on blockchains. At time of writing, USDC sat at ~1,380,000,000 in circulation, and has supported ~$90B in on-chain transactions.

To reflect on all of this, and also to share some really exciting news about the next chapters for USDC, we’re going to be joined by two of the top product executives from Circle and Coinbase who have been responsible for the development, launch and growth of USDC. Joining us will be VP of Product at Circle, Joao Reginatto, and Group Product Manager at Coinbase, Nemil Dalal, with reflections and visions on the history and future of USDC. If you’re in the broader crypto ecosystem, you don’t want to miss this episode, we’re going to have some nice surprises.

Jeremy Allaire: [00:00:09] Hello, I'm Jeremy Allaire and this is the Money Movement, a show where we explore the issues and ideas driving this brave new world of digital currency and blockchains. So throughout the show here, we've talked at length about Stablecoins, about digital dollars, Stablecoins, and we've talked a great deal about their role in the future of the financial system. Obviously, it's a overarching theme that we're exploring here. And today, I think we're going to talk about what is the biggest story in Stablecoins in the world right now, which is the incredible rise of USDC, the digital dar stablecoin, of course, that Circle and Coinbase through the center consortium launched back in late 2018. Less than two years ago on the show today, we're going to talk about it, talk about its history, talk about its rise from we're excited. Also announce USDC version two, which we're to talk about a little bit later in the show. And today was actually another major milestone. The episode title and we came up with this was USDC and one billion USDC has been growing in terms of net new in circulation at like 100 million per week recently. And just last night crossed one point four billion USDC in circulation. So this is part of a very, very big year since the January pandemic outbreak in China since late January. And then as that started to play out around the world, there's been rising interest in crypto. There's been tremendous rising interest in Stablecoins and in particular in USDC, which has seen a 3x increase, growing, faster than any other stablecoin in the short history of these digital currencies. So USDC at one billion. An incredible rise, including the start of something much, much bigger is happening here. And so today, to reflect on all of this and also to share, I think, some really exciting news about the next chapters for USDC. I'm excited to be joined by two of the top product executives from Circle and Coinbase also been responsible for the development, launch and growth of USDC. Joining us, our VIP product at Circle Joao Reginatto and group product manager for crypto at Coinbase Nemil Dalal. Welcome, guys. [00:02:50][161.2]
Nemil Dalal: [00:02:52] Thanks, Jeremy. [00:02:52][0.2]
Joao Reginatto: [00:02:53] Thank you. [00:02:53][0.2]
Jeremy Allaire: [00:02:55] You guys, this is awesome. [00:02:57][1.8]
Joao Reginatto: [00:02:59] It is awesome. Still so much work to do, though. [00:03:02][2.5]
Jeremy Allaire: [00:03:02] Yes, there is. There is obviously have had the pleasure of working closely with both of you and with the broader teams at Circle on Coinbase as we kind of brought all this forward and seen this seeing this growth. And today's really cool. I was mentioning at an all hands at our company earlier that it's amazing that two years in, we've never touched the Smart contract. Right. It didn't get upgraded for two years. And look at what it's done in that time. And and so, you know, anytime you touch these things, it's a big deal, especially when there's one point four billion of value locked in them. [00:03:37][34.6]
Nemil Dalal: [00:03:38] I was talking to our team at Coinbase about this. And the thing we were just reflecting on was if this were a bank moving, one point four billion dollars would be such a huge deal. And just to see, you know, there is a lot of work that went in, but also just how relatively easy it is in crypto versus other forms, which is really powerful. [00:03:54][15.7]
Jeremy Allaire: [00:03:55] Yeah, totally, totally. These private, private key security in and all the protocols and procedures around them are pretty intense. Cool. So I want to actually start a little bit here just with some of the, you know, initial history. And you both played, I think, critical roles in the first phases of growth of USDC. And I think as a result, you both bring, I think, really great perspective. And I want to start out a little bit with, you know, with that kind of earlier history when I actually pop something up on the screen and and show this if I can figure out the right. Yeah, let's see here. So this is actually just very early days. So October twenty seventeen, you know, about a year before actually this this actually launched. And of course, this is the sensationalized headline from from coindesk. But the idea of of a of Centre and the idea of an open interoperable protocol for digital dollars and other other Fiat was something we're really excited about. And that is sort of grown out of like all the early work that we've done in payments. And, you know, I think the next piece here, this just a little again, a little sort of fun snapshot. Every project starts with a white paper and there is the original Centre white paper. And then we modified it, obviously, as we got together and launched this together. But I think this idea is still this idea that we're all pursuing. Right. Which is an open, connected global system that makes it as easy to share value as we can information on the Internet. And I think in particular, you know, this idea that we could eliminate artificial economic borders, we can enable a more inclusive global financial system that connects everyone in the world, that sort of idea of a open, shared, inclusive, more evenly distributed global economic system. That is, I think, a big part of what inspired and inspired, you know, working on this. And I think, you know, coming together, Circle Coinbase to to kind of launch Centre Consortium and then really put this out into the market a year later, I think was kind of borne out of that shared set of ideas. And they're not unique to just Circle in Coinbase. I think these are ideas that bring a lot of people into crypto. But, you know, I'd love to hear, you know, when you think about that kind of early phase, you know, how that mission vision sort of aligns. And obviously, we'll fast forward to where we are today in that. But maybe, Nemil, you could start with just sort of what brought you to this. And when you think about Coinbase more broadly, know getting behind a model like this. [00:06:54][179.8]
Nemil Dalal: [00:06:56] Yeah, I like to laugh that there's a for almost every new crypto, there's an origin story. Like what? Get them excited, especially in the early years when I was, you know, less mainstream. And I think for me, I'd worked in financial services, spend about a year and microfinance or microcredit mobile payments around the world in East Timor and Seattle, the Gates Foundation and in India. Working on mobile payments Microfinance pilot. And I think there's something about the open programmability that was just so exciting about early crypto. And you saw that with Bitcoin and then you saw that even more than Ethereum launched Smart contract. So I think for me, at least on a personal level, that was a core motivating factor. I think it coinbase there's always an excitement around Stablecoins. And I think the big things, they're that they're global and they're portable. And I think a big visionary talk about Coinbase is just creating an open financial system. We saw the power of this like stability with global access, and that was just really, really powerful. And the number two is we're founded by engineers. And a core part of our perspectives had been a programmability as general excitement around programable money and the ability to build applications on top, just like the Internet, you know, as a series of different blocks. We saw the same different opportunity with with Ethereum, with crypto currencies in general, and then especially the power of Stablecoins to unlock more value there. [00:08:13][77.6]
Jeremy Allaire: [00:08:14] Yeah, it makes a lot of sense. Well, I remember, you know, in in in the early phases of this saying like we wanted. We want to launch this. We would launch this, I think, in like three months. Think of crypto. Our speed is different than than, say, a lot of other industries. But it is pretty fast. And you were, I think, PMing a lot of things at that time, different things, but kind of started PMing this. You want to maybe share a little bit about your origin story with this as well? I think it's pretty pretty cool. [00:08:49][35.1]
Joao Reginatto: [00:08:51] Yeah, I've I've been involved in Circle with primarily with our former peer to peer payments product Circle pay that we had back in the day. That has been now retired and and sort of around that date where you where you mentioned in the announcement or the announcement around center is sort of the Q4 2017. I was I was still heavily involved with Circle pay back then and heavily passionate about, you know, this idea of bringing open and global peer to peer payments for for the world, you know, in a way that in a way that the user experience, we're going to be very accessible. And it wouldn't be it wouldn't include any any high friction, any, you know, new concepts or cognition required for it for mainstream and users. But you would it would leverage public blockchains and all all that infrastructure that we're passionate about in the backend. And then and then I think you and Sean, you know, eventually I know it was part of like a lot of conversations, but eventually you you brought me into your office and you said, OK, we need you to PM this new thing that we're thinking about. [00:09:56][65.0]
Joao Reginatto: [00:09:57] And it is a stablecoin. [00:09:57][0.4]
Joao Reginatto: [00:09:59] And and at the time it was, you know, hats off to you guys at the time. You know what, as a PM, you immediately jump on the how and I was thinking how we're gonna do this. This is this is hard. You know, how do we even begin? But but I think I think that the shared vision and, you know, reconciling that with what we what we always had as a vision as part of Circle. Right. Which is to to bring all of this infrastructure in, to make it available for businesses and consumers so that they can hopefully build a much better financial services infrastructure for the world. That that was that was very you know, it it clicked with me very quickly. And I was very happy to jump on that. But, yeah, also also the the ambitions that we had then were very significant. We wanted to get something out in the market as soon as we could. But I think but I think in the end, we did the right thing and we we had a very, very intensive conversation with the industry about USDC before we touched, you know, the first few lines of code. Well, there was a lot of stuff being built already. But but in terms of the actual shape and the attributes, the quality properties of the solution, I'm very proud that we had literally hundreds of conversations with folks in the industry. And it was the feeling that we could have already had. That point is that it was going to be very well received and it was going to be something that was going to be foundational. So I'm I'm happy to to sit here like about two years later and just see that it was actually looking so, you know, back then. [00:11:31][91.9]
Jeremy Allaire: [00:11:31] So obviously, you know, Circle Coinbase had this kind of, I think, shared long term vision for what's possible, open an open financial system, programable money, ubiquitous peer to peer kind of kind of payments. But I think if you go back to the fall of 2018 when this, like, launched and it launched, you know, I think back to channel, a lot of the attention was on, you know, how do you build a better Tether? How do you build something that's more transparent, that's got regular regulatory frameworks around it, that's, you know, that's trustworthy, verifiable? You know, there was sort of the whole ecosystem was saying, hey, this like this is needed. And I think the you know, while back in 2018, there were like early projects that were programable, Smart contract based projects like the early versions of of compound or other things were just starting just starting to kind of emerge, really. What I like to think of is like the bootstrap use case was like, you have to have a bootstrap use case was like, you know, what I call the crypto capital markets. It was like, this is for people who trade. This is gonna be better because it's actually got real rails. You can get em out of it. It's trustworthy and it moves. And and I think, you know, a lot of that that early energy was on. How do we get this to be a market or like a market infrastructure that can be used in a lot of places, knowing that once you've got that in place, then people could depend on it for for other things, get the liquidity there, get get that there. And and so there was there was a lot, you know, a lot of that in the beginning and sort of the in some ways, like the MVP was like, make this simple for for people to have good on offramps and get it out into the markets. You know, that's part of it. [00:13:17][106.2]
Nemil Dalal: [00:13:19] It's almost like I see USDC and Stablecoins as a core market infrastructure, the same way we think by roads and bridges that enable the state highway system in America. In the same way, I think Stablecoins are really critical in that way. And I think, Jeremy, this is the credit to you and to Circle. But I think when you came and talked to Coinbase about this, I think the things that got us very excited from the start was just trust and how critical at Coinbase trust is such a critical part of our brand. And similar for you that was really important that I think is very different from other products on the market. The value of clear auditing, regulated parties, that was a critical part for us. Another really critical part was just the consortium model. We saw value. The idea was to get more and more parties involved and try to build a standard and some small value to the consortium model, drive adoption and build standards. And I think the thing that's really interesting at Coinbase and the same thing likely at Circle as well, was that it touched like all our products, like we have among Wallet and Coinbase wallet to touch that, Coinbase commerce, if we ever want to make commerce the thing that uses these currencies, this is a critical layer for that. And it also obviously impacted our trading, our ability that buy and sell cryptocurrencies. So I think that it's powerful. It's the base layer on which almost anything else is built in the same way that a dollar or any type of trust trusted fiat base layer for the whole economy to be built on. [00:14:43][84.4]
Jeremy Allaire: [00:14:43] Totally, totally. I mean, we definitely the standards as a core protocols like HTTP of money. I know that this sort of ideas and it's been it's been obviously, you know, pretty amazing. We'll talk about use cases, I think, in a minute. But I'll pop one thing up here, which I think is another thing to look at. Pull it over. [00:15:04][20.6]
Jeremy Allaire: [00:15:06] OK, here we go. So this is like where we are today. And it is pretty cool. [00:15:14][7.5]
Jeremy Allaire: [00:15:14] As of August. Twenty seventh. Right. One point four billion. And you can see where we were back then. And actually like the growth, you know, from zero to let's call it like five hundred million. That was actually pretty fast. It was ever of any stablecoin project. USDC went from zero to 500 million faster than any any other one. Which is which is cool. But obviously you sort of see this this incredible rise this year. And I sort of zoom in, whoops, wrong way, you know, just for optics. Right. We look at 2020, the outbreak in Wuhan where they lock down the city. It was like January twenty third, people in the rest of the world didn't quite figure it out until early March. And and crypto is seen, obviously, a really big rise as an asset class. But Stablecoins have seen this incredible rise in USDC has seen this sort of 3x growth. It's really, really astounding. And I think the thing that I'm interested in maybe chatting about for a little while here is sort of what's what's driving all this growth. And we talk about it in different settings. But maybe first, before we do that, just like reflect a little bit on the on the growth itself. And then and then we can maybe talk about what's driving and talk about all the different kinds of use cases that are emerging. [00:16:40][85.7]
Joao Reginatto: [00:16:43] Yeah, what I what the way I felt in the last two years as we were monitoring growth of USDC is data is that you can actually looking back, looking back is always easier. Right. But now looking back, you can sort of pinpoint phases. And I think I think it's quite it's quite broad in terms of how the industry was evolving. If you look at USDC, I think in the first three to six months, like we grew pretty rapidly, that that's around the 300 million dollar mark, I think. And that and I attribute that to the just to the product market fit that we had in the beginning. As you said, we were very pragmatic collectively. Right. We knew that we had this major ambition and how USDC can be a massive piece of infrastructure for the industry right there. And then there was a need for, you know, just a regulated and trusted stablecoin for. For crypto capital markets, as you said. And we hit product market fit pretty quickly. So I think that first phase of growth was was due to that. Then 2019 was a little bit slower in pace. But I think I think the way that I look into that now, including for Circle and I'm sure for Coinbase is it was similar is that it was it was a very strong building year. There was a lot of building happening in 2019. So there was a lot of actually adoption and thinking around how you USDC can be used in various use cases. But we didn't quite see the reflection of that. And I think now 2020, like we just saw an explosion and the explosion is coming from multiple angles. And I'll let Nemil talk about. I think the defi angle, which I think is a very interesting one. But a couple of things that we have seen and early on, obviously, COVID and the entire, you know, dramatic change that that happened in the world because of that and the fight that a lot of a lot of individuals and businesses had to to stable assets. And, you know, it's quite easy to fly to stable digital dollars today in any part of the world. So we saw a lot of demand due to that. I think we see an increasing trend in terms of businesses trying to explore more around digital dollar based payments, whether they are B2B or B2C, and can talk more about that. But then there was this whole explosion in DEFI that I think was very, very interesting as well that is composing of that growth. [00:18:52][128.8]
Nemil Dalal: [00:18:54] Yes. And I think from my perspective, it had to be encrypted for about six years now. There's always these boom and bust phases and often we can call it busted. Really, it's about retrenchment, investment, and it will be term beetling right or building in the crypto ecosystem. [00:19:09][15.3]
Nemil Dalal: [00:19:10] And so I think you see that with, like the price of Bitcoin went up, then it went down. And during that phase, the theory and was developed. And then that was launched. And then the ICO boom happen and then the ICO boom deflated. And during that period afterwards, it's just a tremendous amount of building. And today we're seeing the growth of DFI. And then again, some tremendous growth. And so I think one observation I just had, and this is maybe growing up in a family where my father had worked at the labs. You can see the power of exponential growth in these industries. And I think for most people, when you compare linear to exponential growth, they don't look that different on a one year phase. Like compare Moore's Law to standard linear growth, they don't look that different. But what happens over like three or five or 10 years is just the tremendous divergence in kind of the outcome. I think that is at least the early indicators that we're seeing with crypto and with stablecoins as well. And then I think that there's a number of different things that happen the last six months. I think one big shift was the flight to safety due to Cobbett. And so you saw as the markets were tanking that the traditional markets, as well as the crypto markets, there's a huge flight to safety. And that was like, I think, one big bump. But I think the hottest thing and maybe I'll just tease it and I'm happy to take in more. Jeremy, is the growth of DFI and I think the big shift that happened recently was, I think, the growth of Compounds token, which happened in there in June. I mean, the launch of Liquidity Mining, which is a form of user acquisition. So happy to discuss that more detail. But I. Yeah. [00:20:34][83.8]
Jeremy Allaire: [00:20:34] Yeah. I mean, I think I think it is like, you know, I kind of like coming back to what you said earlier. It's like, you know, there's sort of like create a reliable market infrastructure that works in these markets like that, that sort of like check. We've sort of had achieved that with USDC. It's got tons of growth there. Like if you believe that Stablecoins as market infrastructure are going to underlie lots and lots of other things, like it's actually tiny right now. You know, as a as a robust market infrastructure, you could imagine, you know, a trillion USDC in circulation at some point. But but but yeah, like the you know, this spring. Right. It was this incredible time where kind of nearly simultaneously, like, you know, clearly like the two killer apps, a blockchains like people. What's a killer app? What's killer app? The two killer apps are Stablecoins, which had moved to become the majority of transaction volume on on blockchains based on a theorem like that was a major thing. And then, you know, credit markets basically that run credit markets that exist on the Internet that you can use Stablecoins with. And so you can lend and borrow in a decentralized way. And then obviously like the incentive systems behind those credit markets and the participation in them and the governance of them and in sort of this really next level of sophistication in another another. But Lego brick, if you will, of market infrastructure. Right. When we think about the financial system, you sort of have these sort of layers of market infrastructure. And in some ways, like we're seeing these layers, both top and DFI is in some ways another Lego brick. And now people can compose Stablecoins and credit markets. And, you know, there's probably 500 companies working on new payments and savings apps that are just built on open rails, which is which is which is pretty amazing. I mean, I think I think it is amazing to see just in the last few months. But like, let's talk about the future a little bit where, you know, how big can can defi get? You know, I I'm not asking you to share like, say, Coinbase internal forecasts or whatever. People have different views. But, you know, I guess how big how big can can these things get. [00:22:46][131.8]
Nemil Dalal: [00:22:49] What I'd say from my perspective is prognostication is so hard and not. [00:22:53][3.7]
Jeremy Allaire: [00:22:55] Just apply Moore's Law and then they'll tell you how big it'll get. [00:22:57][1.9]
Nemil Dalal: [00:22:59] I think there's a vision and that almost all financial services move on to this, this is similar to TCPIP. Some type of backend layer to move all financial transactions. So to me, the bullish case that I would have for this is that all financial transactions, some way, shape or form are moving on this. And it sounds crazy, but I think there's a moment when on the Internet, you know, there's all these independent things outside the Internet. We need all of that. And so I think to me, that's a bullish case. I think that there's a lot of different things we can talk about this more detail of how we would get there. But that's possible. Yes. [00:23:31][32.0]
Jeremy Allaire: [00:23:32] Yeah. Yeah. How about you Joao [00:23:34][1.4]
Joao Reginatto: [00:23:35] To me, what's calling my attention. And it's something we, again, we talk about for a long time. But, you know, but you never know when these things are going to happen. But it's the programmability aspect. And I think a lot of what's happening in DEFI today has to do with that. Obviously, these these credit markets and these decentralized money markets started popping up. But all of a sudden, you know, end users have have a variety of those to pick from. And I think this infrastructure allows just for the comparison between all those [DeFi protocols] to become programable as well and that's what a lot of what a lot of people are experimenting with. So I as an end user, I don't need to be shopping around to see what the best deal is today for my USDC. I can just use a service that has leveraged the programmability of all this infrastructure a I think I think honestly, we're just that's just scratching the surface. I think we all only saw the first few use cases of what can be done. But that's, again, only for credit markets. And we haven't seen anything around payments. I mean, we see some people doing a little bit of that with commerce and how you can now have like atomic, you know, commerce transactions, which typically have been like a huge problem for marketplaces like eBay and so on and so forth. Right. You have the money coming in on one side, the good coming in on another side. And and like, you know, that transaction is not atomic and, you know, and they have fraud and things like that. But with digital goods and marketplaces, what we're seeing is people playing with the programmability of having, you know, digital dollars on one side, digital good on the other side. And that's an atomic transaction. And you eliminate fraud. You eliminate a lot of very interesting things. But this is just a start. Honestly. You put a tip of the iceberg. [00:25:13][98.0]
Jeremy Allaire: [00:25:13] I mean, it seems like. I mean, we're we're certainly seeing, you know, more and more companies that are really using this in payments and settlement in consumer facing business, facing international facing all these different things. We're obviously seeing this growth and DFI. I suspect we'll see. You know, as the usability and scalability continues to mature, we'll see far, far broader ecommerce applications. I mean, we're we're obviously we're seeing some really interesting large companies starting to experiment here. Obviously, you know, one of those one of those origin visions that ties back and we were showing it earlier is the this idea of a standard, the idea of interoperability, the idea that, you know, the digital loss that we might use every day, you know, whether it's a leading crypto wallet or something like a square cash or or a Venmo or revolution or or the equipment products and other parts of the world. And even forward leaning tech, forward leaning banks, neo banks, all these, you know, companies being able to connect to each other over the Internet and being able to have a way to do, you know, near real time, irreversible dollar settled transactions. And it feels like we're getting really a lot closer to that. And I think that then touches on this bigger theme, which is, you know, tie again, ties back to. I think the mission behind center, which is, you know, this empowering people, global financial inclusion, creating this more open and inclusive financial system if you can create standards and anyone can implement them. And, you know, products and services all around the world, it's sort of like the open access to information communications that we have. And so I know I know that's a passion for for, you know, Nemil and for both both of the companies as well. And I think a big part of getting there is really, I think, two big things. One is like much simpler user experiences. So the the the way that someone gets started with sending and receiving something like a stablecoin being much simpler and then better, you know, better blockchains infrastructure, basically, which is like how do we how do we support, you know, Internet scale applications and Internet scale usage of of things like USDC. And I think with that, as the world can can look a lot a lot more interesting. And so I guess part of that is trying to solve these problems together. And. So I think one of the things were going to talk about here is USDC version two, which is pretty exciting. I believe it went live on Mainnet like 11:00 this morning. So it's it's live and which is awesome. But there's as noted, this is like the first upgrade in two years or over two years, and it's pretty cool. But on that concept of how do we make progress against the goal of making this more easy for people to adopt around the world? One of the big innovations and one that I know Coinbase contribute a lot to is this gasless sends model. And I thought it'd be great to talk a little bit about that part of USDC 2.0. And I'll maybe turn it over to you, Nemil to frame that. [00:28:40][206.8]
Nemil Dalal: [00:28:41] Yeah. Absolutely. And I think like like like you mentioned, Jeremy, where in some ways we are in our pre iPhone moment in crypto, there's still this a tremendous amount of usability that we're working on to make this easy and simple to let other people use. I often get the question, "When will there be a world where my grandparents and crypto?" And I think my my goal is that there's so much complexity here, the goal is just to abstract it away where none of us think too deeply when we start a car or use an iPhone and wonder what's going on underneath the surface. It lets us do what we want to do. [00:29:09][28.4]
Jeremy Allaire: [00:29:10] And so I'm not thinking about using secure sockets layer when we buy something on the Internet. Right. So like the early days of the Web, you do you're like, is it SSL through a big dialog in your face? And those like, are you accepting this certificate and the like, you know, it's like this stuff. Yeah. Simple, simple simplicity requires things to become invisible. [00:29:29][18.8]
Nemil Dalal: [00:29:30] Exactly. And so the goal here is just making more and more that invisible. And I think in a lot of ways, like the way you move USDC today, it's like I liken it to moving. If you wanted to pay someone 20 dollars. You'd have to go buy a euro and also spend that to be able to send the twenty dollars that is use case for it for anyone who doesn't work is actually worse than that. [00:29:49][18.6]
Jeremy Allaire: [00:29:49] It's like you have to go buy, you know, like energy credits. [00:29:53][3.7]
Nemil Dalal: [00:29:55] Exactly. So I think a core part of changing that user experience is making it easy so that you can just use dollars. The same way you might spend dollars, you don't need any other currency. You don't need any credits. Same way as that, you can be able to take your USDC and set it up. And so would we work very closely with the Circle team on just basically this idea of gasless sends. And for a non-technical like definition of it's very simple is that you don't need that other currency. And so what that means is that let's say you have a wallet, that wallet can, on your behalf, decide to pay. So they don't you don't have to ask the user to pay. And this is a really simple example. Often when consumers send money, they don't pay a fee like you might if you send, Venmo. You're not often paying a fee for that. It also means that third parties can charge you can charge the ski and USDC. So, for example, if a third party wanted to, says the fee, they didn't require the user to go get another token. They could directly just pay an USDC. And so the whole goal here is just cutting down friction and the complexity of this process. And I think this is just one step of it. I think what I like is not just the usability angle, but also the fact that this could be a business model for other companies, which then drives more and more, you know, parties that might provide these services. [00:31:07][72.1]
Jeremy Allaire: [00:31:08] Yeah, totally. I mean, some I was talking to our company about this again earlier today and our hands and, you know, and, you know, sort of before and after. And what does this look like? It's, you know, I think it's it's really core to virality here, which is that there's hundreds of digital wallets that implement these these standards that actually support USDC today. If they upgrade to this capability then it's more it is more like a Venmo experience. Like, I want to send you some digital dollars. How do you get those? Download any of these hundreds of apps from any country in the world and you show me your QR code and I'll send you some USDC and now you can send it to someone else. And if there's a fee, it's paid out a USDC or maybe there's no fee at all. And I don't have to worry about, "I need to go buy some Ethereum. What's Ethereum? What's gas, what is all this? So it radically simplifies it and I think we're gonna see lots of digital wallets that want to implement this very quickly, I hope, because I think it just it will it will help with mainstream use for for sure in a big way. So do I. Maybe you could talk a little bit about, you know, from from a Eco-System perspective, you know, if I'm a developer or I build wallets or or or custodian or exchange or others, how can they take advantage of this today? Like, what do people need to do? [00:32:32][84.1]
Joao Reginatto: [00:32:34] Yes, there's a there's a couple of different ways, and we intend on also producing more documentation and more, you know, just concrete examples of how developers can take advantage of this. But we are happy. I think Nemil and some other folks on the Coinbase team and we have some folks on the Circle team always present on the Discord channel for USDC. And there's always a lot of developers asking questions about how to implement this or that or the other on top of USDC. So happy to answer questions there. But essentially, if you go to the if you go to the USDC GitHub repo, you can have a look at at the Smart contract infrastructure and you will see that essentially USDC 2.0, as we said, includes this new capability. It's a new set of operations on the Smart contract that typically a wallet provider would benefit a lot from. So you would have to wire up your your infrastructure into those those new operations to, you know, to implement, you know, as the said, depending on how you one day you UX to be. Do you want to subsidize the cost of gas? Do you want to charge your user and take a take part of the actual you USDC amount that is about to be sent or they want to charge that on the receiving side because it's a slightly different business model. So, you know, the UX is going to vary, but essentially you're going to communicate with the Smart contract in a slightly different way with with these new operations that we have. And and as I said, we're going to work on producing some documentation and examples of how this can be used. But we're happy to answer questions on Under Community Discord Channel. [00:34:03][88.6]
Jeremy Allaire: [00:34:04] Cool, it's awesome. So hopefully we'll see some stuff shipping really soon. And also we'll update that online. And, you know, this this sort of usability problem is is one of the one of the problems. And there's more to that. Obviously, there's like issues like identity and naming, you know, like long addresses and things like that are complicated. And, you know, there's decentralized identity naming models that are that are being developed. And those are, I think, ultimately like really complementary to things like USDC for simplifying payments. And one, you know, one of the other big areas and we've talked about it at a high level. And I think we'll probably keep it at a pretty high level here today is, you know, if we think about USDC as a protocol, which it is, and as a standard, we want to make sure that that standard works, you know, broadly that it can be used on different platforms and infrastructures. And earlier this year, we talked about a multi chain framework for USDC. And I know that there's a lot of work happening around that. And I think one of the things that we'll see is a lot more innovation happening in third generation Blockchains that are coming out and getting to a place where, you know, people can have very payment oriented Blockchains, embedded device oriented Blockchains and a lot enterprise oriented blockchains a lot of different use cases that are there. But I'd love to hear both of you guys talk a little bit about the scalability, you know, piece of this. If if if major consumer companies want to start using this as a standard in the next 12 months and are pointing tens, if not hundreds of millions of users at these networks, you know, how is that how are we going to have USDC support that? [00:35:50][106.4]
Nemil Dalal: [00:35:53] I'm happy to to dove in here a little bit is that I like in a little bit like the days of the modem where we're still very early on in terms of people that are available on this. And I think there's some good studies that compare Bitcoin, let's say, to the new set up work. And in terms of what the throughput and scalability of those networks are and to their credit, like every Blockchains has realized this and is working on some solutions. So, for example, if Ethereum is underway on a large particle Ethereum 2.0, whose job is to increase scalability of the network, and there's a number of different proof of state chains that have launched to enable this. And I think to me, like is a principle. The goal is that USDC should be available wherever developers and users are over time. And just like, you know, the space has changed so dramatically, so quickly. I think the goal is to continue to do that, to enable USDC and Ethereum today, potentially other chains in the future, wherever developers and users are really clamoring for it. [00:36:44][51.6]
Jeremy Allaire: [00:36:46] Yes. Joao. [00:36:47][0.7]
[00:36:48] Yeah. I completely agree with that. I think if I can share a bit of an anecdote, Nemil and I, we shared a business trip a few months ago and you were in D.C. talking to this very important entity over there. And they I think they asked the question by Nemil, you know, why did you choose Ethereum in the first place? And would you choose Ethereum again if you were to design USDC today? And our answer was very easily yes to both. Right. The reason why we chose Ethereum was clearly because of the developer traction and where where the developer eyeballs and the end users eyeballs were at the time. But even today, if we were to build USDC again, that would probably be the as we call sometimes a canonical chain of choice. But the way that we see USDC is also as a standard or right. As a as a as almost like a protocol layer. And and so we have to be we have to be open to to bring in USDC to new places where where interesting things are happening and especially as different public blockchains infrastructure is developed with particular specialty is whether it is scaling or use case or whatever it is if that brings growth and use cases for the kinds of things that we are passionate about, I think it's it's natural that we would gravitate and look into supporting USDC on those on those infrastructures as well. [00:38:12][83.7]
Jeremy Allaire: [00:38:13] It seems like for sure the next year there's just intensifying work on the infrastructure layer, you know, coming from a lot of different places and and sort of digital dollar standards are going to be in focus for everyone. Everyone wants to have a digital dollar standard that works on the Internet. That's it. It's pretty, pretty awesome. And I'm excited about what I think we'll see kind of coming there. Lots of other things we talk about, obviously, around, you know, broader adoption of this within the financial industry. Like, how do people fully embrace things like compliance with travel, reputation and risk? And as we talked about, you know, the the beginning phases of, like, programable know, programable money. I mean, maybe we just talk for a minute about that, which is we have the example of D5. What are some other either real world or conceptual examples of it's kind of smart contract center already demonstrating kind of the programmability of of stablecoins. [00:39:17][64.3]
Nemil Dalal: [00:39:20] Yes. From my end, I think I've been just tremendously excited at all these different use cases. I think that decentralized exchanges, I think are a really interesting category. [00:39:28][7.9]
Nemil Dalal: [00:39:29] A lot of innovation going on. And so you see for units, what, zero FX? There are a number of different exchanges out there. I think that's one really exciting category. I think another really exciting category is other forms of financial services. For example, insurance options. Yeah. Sometimes securities. So do you buy these acts as a service platform using Smart contract? I think that options as companies like Open. I hope that I did that. And then I think insurance is another really interesting product category, that there is a world where that could be a smart contract rather than just real world institutions. [00:40:02][32.7]
Jeremy Allaire: [00:40:02] Yeah, Joao, I'm sure you have lots of ideas. [00:40:06][4.1]
Joao Reginatto: [00:40:07] There's so many. There's so many. I'm I'm really interested in what's going on in commerce. I think there's some people exploring, as I said, you know, especially with a couple of digital goods marketplaces. You know, this idea of atomic commerce transactions where you have, you know, digital dollars coming in on the one side and and an output of digital goods on the other side. And the amount of infrastructure and operations that you scrape off of the surface of first when you when you implement things in that way. I mean, it's really incredible how these marketplaces are going to look like and how different they're going to be once you achieve that. The other thing that I think it's interesting was a very it's a primitive that I think it's being exercised again and again and again. And it has a lot of pitfalls from a security point of view. But I think we are maturing really fast. Is this idea that you can lock no digital dollars in the form of USDC and then and then conceive how you can generate ordered tokenizing assets behind that? And that can be simple things like, you know, an in-game currency that you tokenizing based on, you know, USDC that's being locked in some place just because perhaps you want to brand, you know, an in-game currency in a particular way, but you want it to be interoperable and just as valuable as dollars are. But also how you can lock that USDC to, you know, to generate other forms of of derivative digital assets. And I think that, you know, what compound built with with cUSDC, it's really interesting in the mechanism. And I think a lot of other people are exploring that for a number of different use cases. I'm very, very interested in that. [00:41:44][96.8]
Jeremy Allaire: [00:41:45] Sort of the connection of the the real world and tokenization is obviously when people get excited about last week we had securitize on and in there had a tokenizing equity example that pays dividends. It's an equity that pays dividends. And the dividends are being paid in USDC because it's the equity itself is reflected in the smart contract. And so when the when the when the dividends come, you can automate them out. And anyone who's a token holder is receiving USDC, which is really, really cool as well. And I think we'll kind of go we'll see going deeper down the stack of financial contracts basically that are that are written that way. So obviously, there's a lot more we could cover there. Just I want to get kind of some of the closing thoughts and reflections, but sort of you know, we obviously we've talked a lot about where it is today, a little bit about where it's going. What does this look like in three years? And, you know, maybe. I always like to ask people the question. We'll keep it simple. What's the USDC in circulation at the end of twenty, twenty one? So what does this look like in three years? And then prognostication on USDC in circulation down to twenty, twenty one. [00:43:02][76.6]
Jeremy Allaire: [00:43:03] I'll start with you. [00:43:04][0.7]
Joao Reginatto: [00:43:05] Okay. I was hoping Nemil would start. OK, how does this look like in three years I think. I think I think the one of the things that we have been working on a lot at least, the Circle side is this is this is how do we support this transition phase, right. Where it where a lot of businesses especially are beginning to to understand the quality attributes of dollars and the benefits of those. But they still just have a tremendous amount of legacy, you know, business processes and funds flows that they need to continue to work with whatever it is to their end users or to their business partners. And and so how do you transition, whether it is, you know, consumer to business or or business to consumer and B2B payments from or how do you allow things to to to start to live in a hybrid way between the current world of Fiat and the world of digital dollars such as OCC. And so I think in three years, I would think that we would we would have made like a lot of progress in terms of transitioning businesses over to something that is a lot more native on on infrastructure such as USDC in such a way that they are accepting and making a lot more payments volumes in this new infrastructure. And we don't have to convert, you know, between this and the old world, so to speak. I I'm never a big fan of analogies, but in a way, I always tried to think about this in what happened with digital photography. When this emerged digital photography was sort of a poorer version of normal photography. So what a lot of people would do is they would they would utilize that new form factor, but they would inherently go back to the previous one. So they would print their digital photos and keep them that way. And as you started having more and more utilities and basically today, you can do so many different things with digital photos. Nobody even thinks about going back to an analog version of that. I think that's what's going to happen in three years to USDC. There's going to be so much momentum and so much traction with use cases that are native in USDC whether it is, you know, payment settlement and B2B payments and all these forms of credit marches as well, especially. And I think I think we're going to see significant more amount of business just being done on a new USDC and not going back into fiat. A prognosis, did you say for the end of twenty twenty one. [00:45:25][139.5]
Jeremy Allaire: [00:45:26] Twenty one [00:45:26][0.6]
Joao Reginatto: [00:45:29] I would I could take the weekly run rate right now and just expand. Yeah. I think, I think easily we got it. We got to be able to do to do a 10x by the end of 2021. So I would expect something like 15 to 20 billion at least in terms of size. [00:45:45][16.7]
Jeremy Allaire: [00:45:46] I like that. Alright, Nemil? [00:45:46][0.3]
Nemil Dalal: [00:45:49] I think one big vision to me for, for USDC as that move companies, tech savvy companies, let's say in Silicon Valley and cofinanced to do a USDC or crypto intermediate to finance stocks. I think that's when they're put up to me very much agree with you, Joe. I think the other things that I find very interesting, Coinbase has invested in grown a lot in terms of commerce and has been opening up in more and more geographies. And I think that opportunity to do well by remittances or commerce is another really critical use case. They'll be on the retail. The third one is that we've seen DFI and a lot of ways Defi there. There they're a mapping we see in the current world cycle, kind of like finance one point five. They take things. We've seen a bank and exchange and map it into a primitive. And I think the quote that I love is from a friend of mine is basically to lean into weirdness and the next to of things like that. To me, the Finance 2.0 things are things that don't look normal in the current. While I give be a really simple example is that most financial exchanges, the goal is maximize minimizing slippage. Is the goal right? And that's because there's a set number of assets on the New York Stock Exchange. But if you have t shirts, if you have other forms of tokenizing, the real change is totally different. So so this mapping of what we have today, just putting on the blockchains not gonna work anymore. And so I think what interests excited about is that I don't know what's going to come from that, but I sense there's something really interesting that's going to reflect the fact of how quick the usage of practice can be different from traditional financial markets. And then in terms of prediction, I would probably in the same order, I would say about ten between 10 and 15 million is the growth that I would see. I think the one thing I'd say in this space is that it just takes one or two things hitting like we've seen this growth in the last just just the last six months, really. And there's like one or two instances. One way, if I'd like. I think that's a vision. On that, though, like one project heading in the right way and suddenly you could bring management online. [00:47:48][119.0]
Jeremy Allaire: [00:47:49] Absolutely. Yeah. I mean, I, I can I can think of even a few projects that I'm aware of kind of cooking that themselves, like could contribute a billion or two themselves. It'll be interesting. Super awesome. Really, really excited and and so pleased to have both you guys on to reflect on the growth and success of USDC announced. Yes, DC. To look forward to the continued collaboration. [00:48:15][26.5]
Nemil Dalal: [00:48:17] Thanks so much. [00:48:18][0.3]
Joao Reginatto: [00:48:19] Thanks for having us. [00:48:19][0.5]
Jeremy Allaire: [00:48:20] Absolutely. [00:48:20][0.0]
Jeremy Allaire: [00:48:23] So obviously really exciting times in Stablecoin land with USDC. A lot to reflect on there. And it will be, I think, trying to share a lot of the thoughts and quotes and clips and other things out of this, because I think it's a great moment in time. Next week, we're going to continue on some of these themes. But we're going to explore something a little bit different, which is what is the relationship potentially between digital dollars Stablecoins and central bank digital currencies? Will they coexist? How might that take place? We're gonna be announcing the lineup for that soon. But it should be a tremendous show with several individuals who are very close to these discussions. Until next time. Stay well. Stay safe and stay informed. Thank you. [00:48:23][0.0]
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Episode Highlights

Jeremy and guests open the show sharing how USDC has crossed $1.4 billion in circulation

Jeremy, Joao and Nemil reflect on how USDC began as a joint misson by Circle and Coinbase

What are other examples of smart contracts that are demonstrating the programmability of stablecoins? Jeremy, Joao, and Nemil discuss on The Money Movement

USDC has reached 1 4 billion in circulation, Jeremy, Joao and Nemil discuss the reasons why on The Money Movement

Jeremy, Joao and Nemil talk about USDC 2.0 and how it will improve blockchain finance infrastructure

What does crypto look like and how much USDC will be in circulation in 2021? Joao and Nemil give their thoughts on The Money Movement

What does the future hold for stablecoins moving forward? Jeremy and the guests discuss on The Money Movement

Where are we at and where are we going with USDC, financial technology, and blockchain?

Guests in this episode

Joao Reginatto

Head of Product, of Circle

Nemil Dalal

Group Product Manager, of Coinbase