Outlier Ventures Weekly Brief Issue #53 View Online

Stabletokens are going to be all over your newsfeeds very soon. Christine Lagarde from the ECB  made a statement about it today. I have been studying stable token traction over the past month. Here's what I found. At a little over ~$237 billion moved on-chain, stable tokens have moved roughly half as much as traditional remittance markets do. Granted one is largely unified and digital, and the other requires a network of last-mile solutions, in terms of scale, stable tokens have reached volumes where they are beginning to matter. Exchanges implementing USDT-Erc20 is the crucial reason behind this. Traders dominate stable token usage today. The average transfer on USDT Erc-20 was at ~$9500 vs ~$300 for remittance on Transferwise. 

But things may not remain that way. The initial users of a product and the eventual market for it could always be very different. Governments that needed a surveillance network were the primary market for many computing systems. Today we yield the power of what may have been the most powerful computer's capabilities in the 60s in our palms. Academia was the internet's first market. Niches that are far from what is the mainstream today. Digital-asset based payments network will very likely evolve from what it is today. A stable payments network that is native to the internet is still not here if we consider Bitcoin as a store of value.

One way to think of stable tokens is as the railroads for the future of finance. The other is as a fad that may die. I am inclined to believe it is the former because for the first time, in what seems like a long time, speculation has been removed from what a token can do. One can use DAI today with no concern about what Maker's price is. Those bootstrapping a network and those using it are separated. That stands out to me. At a time of economic uncertainty, expecting your end-users to be willful in taking risks to use a product sounds somewhat odd to me. It may not be long before we see a suite of products around stable tokens that are native to the internet. Think about subscription businesses run by creatives that have an audience around the world. Or remote-first teams that need to make payments around the world. Or the gig economy for that matter. As talent becomes global and banks take their own sweet time to cater to the financial needs of those working remote first, stable tokens will offer an alternative that works at speed, protects their privacy and is available across the globe.

I am aware of the fact that without on-ramps, stable tokens may not go far. In regions like India, where banks don't work with crypto-first businesses, even acquiring USDC holds a 10% premium. However, as Christine Lagarde stated today - regulators are waking up to the possibilities that this new paradigm makes possible. What started with BitUSD and Nubits, evolved with MakerDAO and became an entire pandora's box with the likes of USDT, Libra and CBDC's (central bank-issued digital currencies). The end-product may look very different from what we have today.  Similar to how Napster and Spotify look very different but have a common DNA behind them (props to Sean Parker).  It could be a currency that is backed by bonds, it could be one that is issued by algorithms or it could be a reversion to the gold standard. Who knows. But change is here. In a somewhat stable form.   

Reading:  Intercept by Gordon Corera
Listening: Pharrel Williams - Happy
Using: UMA Protocol's synthetic token maker

Be kind, 


From The Stack

  • Bloomberg released an article exploring how Fetch.AI will enable cars to autonomously pay for their data in real-time - Link
  • Ocean has released a new development update in relation to their imminent release of v2 - Link
  • Enigma released a post co-authored with Intel security announcing the team's implementation of Enterprise Ethereum Alliance's Trusted Compute Specification - Link
  • Chainlink did an AMA about integrating Ampleforth this week on their Reddit -  Link
  • The Orbs team's monthly update is now released - Link
  • The agoric testnet is round the corner. Applications for validators are now open - Link
What The Team Is Reading
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