Laurin Bylica and Joshua Scigala on The Standard’s stablecoin

0:02i'm ashton addison from block west capital for investment pitch media and the crypto coin show and today on blockchain interviews we have lauren baliza and joshua shagallah co-founders of the standard gentlemen welcome to the show and thank you so much for taking the time to be here thanks for having us ashton you're very welcome i'm excited to dive

0:21into the world of stable coins and not just any particular stable coins uh your team has really developed an initiative that i think could be part of the future in the transition to something that's a little bit more uh foundational and backed by some actual value so i'm interested to hear your perspective and how your team has developed out these algorithmic stable coins if

0:44you could start joshua by giving us an overview of the standard and what your team has been working on then we can dive into the details yeah sure thing so the standard came about um by the love of the understanding of the gold standard you know hence the name the standard but we didn't you know we've been running a crypto we were the first to run a crypto

1:04gold exchange at world tour that we invented back in 2015 and everyone always came to us and said hey tokenize gold tokenized gold and and there was always a problem with that because you can't just tokenize gold because there's real world costs to that there's the what's called demirage costs so you have um you know the men with guns the big doors the

1:26insurance the auditing and that stuff can't get paid for with a simple token if i'm holding an erc20 for a ram and i lose my keys then that place is going to be paying that forever for me and so it turns into a ponzi scheme where they have to get new people in to pay for those people that lost their keys or whatever so we really wanted to figure out how to

1:48build a better system and so the standard came about by allowing people to to lock up gold and lock up cryptocurrencies into a smart contract and then borrow against that collateral in a in um to to generate stable coins paid to the euro and then we wanted to not only do the euro we wanted to do uh pretty much every fiat token uh well

2:16fiat currency uh eventually but we'll start with the euro as a simple base product so it'll be the first fiat peg stable coin backed by physical assets and soft assets and this is a really really interesting use case because we don't want to wait for governments to create a gold standard we can create that ourselves privately people can privately decide to back their currency by gold

2:42and uh and the other great thing was that they were would generate a loan against themselves and and be able to pay themselves back so if you have an inflationary event after a while it gets cheaper to pay your own loan back so this was a really big step towards uh allowing people to hold their wealth without spending it and also don't get hit by capital gains

3:06tax and such by instead of selling your assets you actually borrow against them right very interesting and yeah it's i could see how that experience at valtteri with the gold is would play a role in you finding a solution to also be able to incorporate uh taking out loans collateralizing and and then creating value that you can actually use out of that

3:31to back a stable coin and it's really interesting uh process that you've developed to do this because it's not something that you often hear there's a lot of stable coins that have been around for five plus years uh that aren't doing this at all uh they're backed by totally different methods maybe you could talk about how you approached that market seeing what was currently in the market

3:54for stable coins and the competitive advantage that you're finding uh developing the standard moving into a market that's you know years old already right right so i had to go with this question the standard is like our stablecoin will be backed by a variety of very variable variety of fungible assets gold is the first asset amongst bitcoin that we were on board with the platform

4:18but uh at the end of the day we want to focus on physical and digital assets they will back uh the stable coins and uh the whole platform is governed by a decentralized autonomous organization the standard dow the senator consists of the community of standard token holders that will manage and also govern the platform and for example the onboarding of new

4:46collaterals so assets that can be used as collaterals will have to be approved through the standard dial this is a beautiful process because this will allow decentralization it will also allow people a community of people to audit the platform make sure these assets are really uh backing the stablecoin the stablecoins another part another interesting part is that

5:08all fiat backed stable coins a variety of different issues for example negative industries like we see in the eurozone where negative industries makes makes it questionable how can be a stable coin fiat bagged with euro actually exists when the company who holds all the euro to back up there the stable the stable coin euro is

5:36holding guests in the bank account has to pay a negative interest fee so these uh holdings so this is one of the flaws of stable coins that are fiat backed another one is upcoming regulations regulations are always the topic in the crypto space and this is a major issue also for um fiat backed stable coins so we moved away from the concept we think that

5:59algorithmic stable coins are the future that are backed by a variety of tangible assets and uh we also think that having a smart soft-packed mechanism that keeps the euro to the standard hero packed like the the equals the values are that this is really the future and this is the way to go and this works for basically every currency in the world definitely that's

6:26quite exciting and i did i was reading into that yeah the s euro is the first uh currency that you're developing alongside of the standard token as well and i'm curious to know as you continue to grow throughout the years is this something that is also capable with north american currencies or asian fiat currencies and is that part of the plan um or is it

6:49something particular about the euro itself that makes it a great first uh choice of that stable coin backing yeah so the we've chosen the euro because if you look closely every stable coin that's out there is already usd and why is that why isn't there a stable coin one to one backed by fiat um already in the eurozone and lauren touched on it it's because of

7:16their negative interest rates you can't hold billions of dollars in a bank account and get charged every month a crazy amount by the central bank just to hold that so that's why we wanted to tackle that because it's not like there's no euro stable coin because it's not useful there's no euro coin because of that reason and then we want to tackle the

7:35south american market the usd the yen we feel that inflation in these inflationary markets are really useful imagine you're working uh paycheck to paycheck you're earning right so by the time you get to the next month you you've run out of money and you get your paycheck and this is the the vast majority of people work like this in terms of the middle

7:56class and so these people don't have access to saving because they don't have any extra money but the problem is if they bought the gold then they don't have any money for living so imagine if they could buy cryptocurrencies or gold and then borrow 85 of that to actually have liquidity or up to 85 and and especially in south america something like argentina is

8:19getting really hit by inflation that inflation effectively pays off their own loan because let's say you borrow a thousand a peso from yourself um then uh maybe in five years time that a thousand bezos which then bought you a nice electric bike uh buys you a carton of milk uh in ten years time so effectively you've kept the gold you've kept the cryptocurrencies which

8:44has gone up like crazy yet you can pay it off with a carton of milk now and you and you have an electric bike so so by by being able to have true gold backing or asset backed loans to yourself without begging a bank for a loan you're borrowing it from yourself with over collateralized loans this is a total game changer and and and being able to uh have these stable coins

9:11around the world also allows them to say hey i want a saving gold but i want to get a nice yield on that goal this is this is something that um like warren buffett has had a real challenge with with gold it's like well i like gold but it has no yield and you're like well if you chucked it if you borrowed from yourself and used the d5 system some of these default protocols

9:33have like 16 yield it's crazy and yeah they're not guaranteed for sure but um they're basically used to market make um these decentralized exchanges and they're very good at creating a yield sometimes it's not so big and eventually over time as more and more people come in they'll equalize down but but i think there's a lot of opportunity there to save in hard assets that generally

9:58just sit in vaulting facilities gathering dust and but be able to use those hard assets as collateral and actually earn a year definitely very well said joshua and i wanted to step back for a second just to get the viewers have a clear understanding of the ecosystem because you do have the s zero you do also have the standard token and there's multiple coins that are in the

10:20ecosystem you mentioned using d5 there uh for getting yield can you talk about you know just a brief like the differences on you know the standard token itself and then other functionality differences between the stable coin and the token yeah so the big difference here is the use case so this stable coins that we are developing they are built for transactions

10:44so we want to build stable coins for the everyday life where people can start making purchase purchases with these stable coins for example the standard euro and um then in the future hopefully a standard us dollar and a standard yen and so on so these are the use case for the standard total for for the standard stable coins they are for transactions

11:06they are also um to be used in yield farming activities where um people can take the stable coin and offer them to liquidity pools and earn a yield on that um so technically while people place the gold in a smart world what is that they call that the the smart contract used or named by us um the smart connect used for uh storing the gold

11:36um on the uh on the platform then people can use the stable coins and put them into the liquidity pools so this is this is a one of the beautiful use case of the stable coins while the standard token which is the governance token of the platform enables people to participate as actively in the governance of the platform make key decisions and participate also in the voting

12:03so when you hold standard token you're an active member of the platform and you can actively manage and grow the ecosystem additionally to get this token value the token enables you also to reduce the stability fee of the protocol so this is one of the use cases another one is liquidated acids on the spot

12:28by liquidated assets on the spot so people that hold at least an amount of 100 000 standard token they get access to liquidated acids under spot because when these collateral when these smart walls fall under a fall under the minimum collateral level that means for example ethereum if someone placed a theorem of bitcoin into a smart world as collateral and

12:52this collateral falls under this minimum collateral level the smartphone gets automatically liquidated it liquidates the assets and people holding stamina tokens get the chance to buy these assets on the spot and the other the other mechanism the other use case of the center token is really participate in prediction markets so we are hoping to replace

13:16the voting as the governance mechanism with prediction markets while this is a really new field we will need some time to to uh to get first voting right and then gradually move over to prediction markets yeah the prediction market is an interesting thing um we i'm i come from the libertarian side of things i don't see voting as the best form

13:41of i mean you can watch some of these talent shows some of the most ridiculous people get through because people vote for weird reasons uh it's not always the best singer that gets through you know so voting can sometimes you look at some of the leaders that get voted in around the world you think voting is kind of a bit flawed so prediction markets are actually there's

14:03a lot of academic proof behind prediction markets allowing people to put their dogmas aside because there's money to be made by finding the truth so by us trying to figure out what the what the best interest rate is when you borrow money from yourself to peg the uh the the standard uh euro to the euro what is the best method people will earn money by finding the correct answer to that

14:32problem and this is um this will take a while we'll start off uh more in a centralized mechanism of voting and then slowly head towards the full prediction model uh over time but we feel that this will also solve voter apathy within the dows that are floating around a lot of dows um are really interesting i love the doubt because especially for our project you know um

14:56interest rates in by central banks are controlled by uh strange old men behind closed doors and you don't know what they're doing they're just controlling the interest rates of all the money and actually steering economies but imagine if you could have the interest rates decided openly and transparently by thousands of people around the world and this is what dow token holders are

15:19allowing them to do so they can really steer the model they also have access to tell the dow how to spend the treasury so the dollar has a treasury of millions of dollars that they can say okay we want to put money into marketing or we want to put money into uh you know whatever they want and uh and this dow will grow the protocol like that as well so there's there's

15:41interesting things to be had for holding the dao token exactly and yeah on top of this people that really participate in the voting mechanism early on and then in prediction markets as they do i work with the platform they do they grow the ecosystem they receive also a voting remuneration so um there's a monetary incentive to uh for people to participate

16:04in the governance of the protocol definitely that is quite exciting and i'm looking forward to seeing how the dow plays out i think putting the prediction market in there you know prediction markets i think uh are great predictors when people are putting their money in and going getting a group consensus of of what something needs to be valued at uh and you know what the interest rate

16:24should be or whatever else the prediction market it is uh you know being worked on i think that's a great uh way to go about it and it is early on there have been some great prediction markets that have come to the crypto space but they just need that fine tuning and i think introducing your dow combined with that may be a great solution so i'm looking forward to

16:45seeing how that plays out can you guys talk about where it's at right now i know you're working on the dow uh the the coins are you know you guys been working on this project for quite a while can you give a snapshot to the viewers of where it's at and where you're headed uh for the rest of 2021 yeah you know since we've seen this bear market sort of

17:07here some people call it bear market some people call it correction whatever you want to call it uh it's allowed us to actually sit here and and work and build you know uh where they say huddle during the ups and build their build uh during the downs and that's really what we're doing we're building so uh we're working hard we've got a team of like 10 people working on this

17:28uh full time now and uh so we're coding we're building partnerships with vaulting facilities to allow their customers to collateralize and join the space uh we're we're also getting great advisors on board uh to help us really steer the project in the right direction both ethically um financially in terms of economic theory and game theory and as well technically

17:52so there's a whole bunch of stuff to do um where we're definitely not lacking things to do and that's basically what we're doing we are in a a pre-market distribution phase where we are talking to some angel investors and vcs um and if they want to come they should uh you know send us an email on the standard.io and uh and see how they can participate

18:12but um but really it's about building right now right yeah most of my day is used to like look into partners so we are looking at vaulting facilities that want to partner early on with this network with this platform as well as um on the flip side of things use cases from the standard euro so merchants and other companies that will accept standard euro as a form

18:40of payment so it's really a lot of ecosystem development that's happening at the moment and the feedback is great people really are are really excited about this project and yeah there will be a lot of exciting announcements coming soon um but yeah this is really uh great to see how the how the crypto world and not only the cryptoworld is accepting and waiting for this platform to come

19:07yeah it is really exciting working on this project i've got to say i feel it it's uh it's fun to see it's fun to see a project coming from an idea and building it out where other people are really excited to come on board like wallets and and the such like that yeah yeah it is quite exciting and it's nice it's a nice uh twist and and a a refreshment

19:29from traditional fiat backed usd stable coins so i'm interested to see how it will play out i will be following along for the viewers that are also looking to follow along as you continue to grow what's the best way for them to learn more and to get involved in the communities and in the dao yeah i would just say um join up to the standard dot io um have a look there join the waiting

19:50list and join the telegram channel um we're going to move over to discord once it gets full but right now we're we're still just a small community we're pretty under the radar at the moment so um that's where we're chatting and talking and discussing things and um and yeah that's basically how you stay in touch sounds great i will leave those links to

20:13the uh in the description box below all the best with the standard moving forward i will be following along and let's follow up in the near future