Solutions for Real People's Problems w/ Thomas Mattimore (Reserve Finance)

**Speaker A:** Welcome back to the Strange Water podcast. Thank you so much for joining us. Here's the awkward situation those of us in this industry have found ourselves in. We unflinchingly believe in the power of. **Speaker B:** Crypto to change the world. **Speaker A:** And yet we're forced to reckon with the reality that as of now, there really are very few use cases for crypto other than speculating on its own future use. But there's a world of difference between no and very few use cases. Let's run through some examples. I can send money to my family, even if they live in a country that happens to be on the USA's naughty list. Or I can store my wealth in US dollars, even if my country wouldn't otherwise allow it. Or I can flee a deteriorating society with real resources, all while keeping my real resources indetectable. Unfortunately, the vast majority of people that could benefit have no idea that this technology even exists. But fortunately, we have people like Thomas Matamore who are betting their careers on solutions to bring it to them. Today you'll learn about Reserve, an app that combines thousands of real world users in Latin America with a protocol that deploys increasingly sophisticated on chain strategies and a team that, as I always put it, are doing the Lord's work, giving crypto use in the real world. Before we begin, please do not take financial advice from this or any other podcast. Ethereum and decentralized finance will change the world, but you can easily lose all of your money in the process. All right, let's get started. **Speaker B:** Thomas, welcome to Strange Water podcast. Thank you so much for joining me. **Speaker C:** Yeah, thanks for having me on, Rex. **Speaker B:** So before we kind of get into this conversation, would you mind giving myself and the audience a little bit about your background? **Speaker C:** Sure. Let's see. So 10 years ago I was a mechanical engineer and then realized I didn't like mechanical engineering and didn't want to do that for the rest of my life, but jumped into tech. And so I've been in product management in mostly fintech for the last 10 years. And in that time it was always building, mostly building tools and products that gave people better access to different financial services, whether that was like wealth management, robo advisors, or more efficient mortgages. If anyone that's listening has bought a house, you know how terrible that process is. And then I joined reserve a year ago to lead the protocol team as the head of platform where I focus on everything from product to growth to, you know, everything that comes along with leading a protocol team and building building in the on chain world. But you know what Got me into crypto. I actually bought Bitcoin for the first time in 2014 and have managed to figure out how to lose money in crypto in every single cycle over the years. Kidding aside, I've always been really interested, like what are the things that could be built with this technology? And then in 20 I used the Dex I think for the first time in 2018. I don't even think it's around anymore. **Speaker B:** But. **Speaker C:** In 2020 or 2021 maybe. I got a loan from Makerdao and it totally blew my mind. It was the first time that I was like, wait, this thing that everyone's been talking about that's coming in a couple clicks and a couple transactions. All of a sudden I had myself a bunch of dai and it was this magical moment for me. I was working in consumer lending at the time and it took us 30 days to close a loan and tens of thousands of people to do was still really, really painful. Yes, over collateralized margin loan is a very different product than a mortgage. But the, the fact that only a couple people had built that protocol and written the code for it and that I was able to do it in a couple clicks, in a couple minutes was just absolutely mind bending to me. And they were doing more lending volume than we were as one of the largest mortgage providers in the country. And so that was like, whoa, this is an efficient thing. And so then I went down the defi rabbit hole and went into basically every different type of yield farming available, every different type of Ponzi scheme that was available at the time. But I really started to think about like, okay, it's here. I want to, I want to jump in. How am I going to jump in? What are the, like, what are the things that I'm really looking for? And I just started talking to as many different people as I could and I found that, you know, I really wanted to work on something that had the opportunity for a great product market fit and something that was useful for people today. And then also I wanted to work on a core protocol. I wanted to work on the technology that is the actual and not a thing on top. And so I got connected with Nevin, the co founder of Reserve who leads the overall project and it was just like immediately a perfect fit. It was, you know, stablecoins in Latin America where people actually need access to stable currency and don't have it. And working on this like really interesting protocol that I think enables some fascinating and actually useful products for people around the world. So I can go, I'm sure I can go deeper. Reserve for sure. **Speaker B:** Let's talk. I cannot wait to like, jump into reserve and like, the things that at least excite me about it. But before we get there, my question I had loaded for you, knowing that you came out of tech, was to really pick apart how you saw the world differently from the rest of the tech cohort and when, in my experience, the people that are in Silicon Valley today are perhaps the most anti crypto. And we can talk about why if you want, but after hearing your real story, it makes so much sense to me that the guy who was already looking at Bitcoin in 2014 was working in like traditional legacy finance that has the problems that we're trying to solve and then having this aha moment. So your journey is very clear to me. But before we, While we're still hovering around this subject, do you just have any thoughts on why your experience and your journey into crypto was like, kind of so easy and so linear and why most people that are working in tech and even in fintech seem to have like, such a more difficult time to realize that there's any value here at all? **Speaker C:** Yeah, I mean, look, building products that get to huge scale is really hard. And the. Let's see, how do I distill this? I think the. At the end of the day, people don't sell tech. They sell products and solutions. And what crypto has done for the last 10 years is in many cases sell tech. And it's like Netflix, for instance, has never advertised, and they're kind of famous for this back in the day. But we build on aws and it's this massively scalable infrastructure that would be insane to put a marketing copy right? Advertise. Like, we have a great selection of movies and it's fast streaming. Right. What crypto's done forever is they're basically advertising these really slow databases, and why would we care about that? And so at the end of the day, there hasn't been any breakout products like consumer products. And so I think it's really easy from a tech perspective to look at the Facebooks and the Googles and the Ubers of the world with billions of users. Maybe Uber doesn't have billions, but looking at these tech companies with hundreds of millions and billions of users and say that these products have kind of won. Like, why would this thing that has like hundreds or thousands or maybe tens of thousands of daily active users, this is just like crazy, guys, right? And so I think that's a really easy way for people to dismiss it. And then the other thing is that, candidly, a huge percent of crypto has been scams and speculation. They enabled, like, crypto enabled, like, the best online casino ever, which it did. And, you know, that's a thing. Some people like that, but a lot of people don't. So I think that it's, like, easy to write off crypto and Defi and Ethereum in general as scams and Ponzis and speculation. And so that's, like, generally my vibe on it. There's no, like, there's no centralized PR agency that can do a good job of fixing that story. And so it's a bit of a challenging thing that, like, the general crypto community has to do. And at the end of the day, I think it probably happens from great products getting built that get widespread adoption. **Speaker B:** Yeah, man, I totally hear you. And I think that when I'm talking to people outside this industry who accuse this of, like, everything, including Ethereum as being a scam, like, I have a lot of sympathy for them. And, like, I. There's, like, real stuff here that's very important to protect. But, like, the reality is, is that, like, we enable some very bad actors, and those bad actors spill out into the real world. And I don't care if you're, like, talking about, like, retail being dumped on or SBF trying to, like, change the government so it screws, like, the little guy or whatever. But I do, I think, for as much as, like, we love to dump on, like, Gary Gensler and the SEC and all this stuff, it's just like, man, it is the Wild west here and the Debbie Downers, like, they're not wrong. So let's. Let's get out of Debbie Downerland and let's move on to. There is something interesting here, and there is exciting stuff here, and I'm an Ethereum maxi. I'll own it. I think that is what we're building. But what is cool about Ethereum is it lets anybody build anything on top of it. And one of those things is reserve. So let's jump into that. Why don't you give us just the elevator pitch of what reserve is, and then I'm super excited to hear you describe it and what you emphasize because, well, spoiler alert. There's things about reserve that I'm so excited about that make reserve just different from what Defi is today. So before I tell you what I think is awesome about your protocol, I'd love for you to tell me. **Speaker C:** Sure. Wow. Thanks for that pump up intro. So Our mission in reserve is to help fight inflation and give people around the world access to stable currency. We have a two pronged approach to it. One is on the protocol side where we have a platform that allows anyone to launch a stable currency. And the other is we have an app. And so there's actually an app called reserve in 18 countries in Latin America that does it has done like $300 million a month in monthly volume. But what's cool about it is it's all real economic activity, whereas a lot of crypto volume is all speculation. Right. It's people trading dollars for back again. That is actually like the vast majority of crypto volume. But in the reserve app it's actually people paying at the store, people sending money to their friends, getting paid by their company via payroll, doing cross border remittances, all that thing. There actually is very little speculation in it. And so it allows people to go fiat to stable coins and back and do everything that you know, in the US where we are used to very like pretty good financial services, it expands that access around the world. And so on the protocol side though, we launched the platform in October, finished all of our audits in February. The platform, what it really does, it allows anyone to deploy a stablecoin or anyone to deploy a yield bearing stablecoin or anyone to deploy a diversified basket of yield bearing assets. And our vision is that over time experimentation in the market will help us discover what is the best way for people to store wealth over the long term. And not only store it, but preserve it and grow it. Yeah, that's like the high level what is the protocol actually? So when someone deploys there's actually three that are live now. Three different people and companies have deployed stablecoins on the platform. One is called eusd, this is the first one. It's a diversified basket of things like USDC and tether deposited in AAVE and compound. The yield from those underlying positions all goes to an over collateralization pool where people can stake their RSR which is our governance token in exchange for the yield from the underlying. They are the first capital at risk in the case of a dpeg. And so two weeks into this thing being launched, actually USDC depict which no one was expecting. What's really cool is in normal course of operations for the protocol, it can sell off bad collateral or defaulted collateral and then make up the difference with the RSR and the over collateralization pool all before banks open their doors on Monday. And so it's a pretty interesting thing and I think that people in crypto and in defi don't value diversification in the same way as the rest of the financial world. And I think that will become a bigger thing. But you know, like traditional finance, like diversification is king. Right. It's like let's make sure that we can diversify, like our downside, have diversified exposure for like various different types of upside, et cetera. And you know, crypto for a long time there's been so many, you know, we talked about this a bit, there's been so many scams that diversifying was actually like a bad idea. Right. Do I want to diversify my holdings into the top ten things on CoinMarketCap? Probably not. Right. In terms of like a long term investment thesis. But for stablecoins, we launched a beta in 2019 that was called RSV and it was just USDC, PAX Dollar and True USD. And then in a six month period we actually had to change that basket three times because of things that were going on in the market. So like people change, companies change, markets change. And so the ability to update a basket over time and adjust it based on what's happening in the market is really interesting and I think people will start to value it more in the future. **Speaker B:** Yeah. So, okay, as you have split up the reserve into protocol and platform, let's split up the conversation as well. And sorry, just to be clear, the is it fair to. Is the protocol. Basically everything that happens on chain and the platform is like the app and the real world use. **Speaker C:** Exactly, yeah. So the app, the app is separate. We actually kind of operate as two independent companies. And so the protocol team, which is the side that I lead, is just focused on on chain. And so the protocol is a platform that allows people to launch these currencies and then, you know, we are trying to help the ecosystem grow so that it can be sustainable in the long term. **Speaker B:** So is it fair to say that the app and that platform is about building financial services and then the protocol and everything that happens on chain is about building diversified, safe exposure to those assets. And then both of them are valid and could stand on their own, but you're building them together to build a one plus one equals three experience. **Speaker C:** Exactly. And so what's really cool about stablecoins is anyone can hold them and they're really easy to send around and it's like a dollar that anyone around the world can use the app. It's an off chain app and it gives people superpowers in developing countries where their currency is devaluing 7% a week instead of 7% a year and allows them to use these stablecoins to store their wealth and then actually pay up the store with them and immediately convert to local fiat. **Speaker B:** Well, and so how do people experience this outside of crypto world? So, like if I am, let's say in Argentina or Colombia or wherever, just picking countries that I know have inflation problems, right? And so I download the app, I download the app, am I experiencing this as cryptocurrency? Am I experiencing this as like a just like new age retail bank? Like, what am I like, my first question is as a user, am I understanding what I'm doing in a positive connotation? **Speaker C:** Yeah, no, it's interesting people. We've, the app team has spoken to a lot of users and some know it's crypto and some don't. Some don't know it's powered by crypto. They just think of it as dollars. And you know, at the end of the day like your money in your bank account is just there's dollars somewhere and there's different layers of code wrapped around it. Stablecoins are just different code, right? And so it's a novel way to expose these things and give people access to them, but at the end of the day, it's some type of treasury product that's wrapped and shows numbers on the screen. And so, yes, different risks for sure. And our app users see all of that in the agreements and things like that and the terms and services and warnings. But yeah, from a product perspective, at the end of the day, people just want dollars and so we help them get those. **Speaker B:** And so again, not trying to pick you apart or anything, but just trying to understand the user experience. Like when I like Columbia, right. I just happened to be there recently and is one of the reasons I'm super excited to have this conversation because here's some alpha for real world. Like if you go to Columbia, every other store, like literally every other store is a money changing store. And that's because, you know, I think right now it's approximately 5,000 Colombian pesos is equal to a dollar. And like it wasn't always that way. It's like inflation is happening so fast and you know, people use these money changing stores to like protect their wealth and they pay like exorbitant fees to do it like these, you know, it's like changing your money at an airport, right? And so like, if you've been to South America or Latin America, like, you understand why there's a need here. I just, like, I'M having so much trouble wrapping my head around these Colombian people that I saw that have no idea what Ethereum or USDT is or how to evaluate USDT versus USDC or I don't even know how I would explain to them a collateralized basket of yield bearing stable coins. How do you bridge the gap between basically crypto, Twitter and the goat herder who wants to protect his savings? **Speaker C:** Yeah, it's kind of interesting. So if you think about what's backing a savings account at a bank, it's actually a diversified pool of assets and loans that are paying back interest. The bank has a book and at the end of the day your dollars in a bank account are backed by a diversified book of loans with the Fed behind it. Right. And that's where the interest comes from. And so there's a. In many ways I think that these on chain yield products are similar. Right. Like not everyone around the US understands the intricacies of the banking problem or the banking situation and like actually does. Right. Although more people do now after Silicon Valley. Yeah, I think they do, exactly. But I think it's my vision or view of how this probably evolves is that crypto, DeFi, Twitter, etc. Is kind of like the people that actually understand how the bank works. Right. And then the vast majority of people don't need to or want to understand that. They just want dollars that they can save with or some kind of unit of account that helps them preserve their wealth. And they don't really care what that thing is or what the tech is or how the financial incentives work behind the scene. They just want this thing that helps them preserve and grow their wealth. And so that's like generally how I think it works in the US in today's financial system and likely how it works in the future. Is the guy that you saw on the side of the road in Colombia going to be doing L1 Ethereum transactions? No, definitely not. I don't think I should be doing a whole lot of theory transactions. Right. Like they're too expensive. But that to me is like, you know, I don't know what the right metaphor is for the traditional finance world, but you know, the bank to bank interactions, right. Like that's the kind of stuff that happens on L1s. And then people get access to it like in derivatives down the line in safer, more wrapped forms that is. And so one of the things that I actually think is cool about reserve is with these yield bearing stablecoins, it can be bridged to any L2. They can be held in a centralized exchange like our app or coinbase or wherever, and that yield can kick it, that will continue to appreciate there. And the over collateralization mechanism works, cross chain, cross app, etc. And so that, to me, is one of these really cool things of how you think about, okay, how do we build this thing that taps into the deep liquidity of Ethereum Defi compared to anything else in crypto that is actually exportable and usable by people on Polygon or Arbitrum or base or wherever. **Speaker B:** Yeah. And I think, like, I think the biggest takeaway that I'm taking from you when you're building, when you're building in crypto for real people, is that like, you, you need to just focus on the experience and like, if, if any of this is to be successful, like, no one actually gives a shit that there's like crypto or Ethereum or any of this involved. It just like needs to be like an app that like, people want to use and like, does stuff. And this is exactly going back to what you were saying about like, Netflix, right? Literally no one chose Netflix because they're using AWS and not like their own custom shoddy servers or like they were using AWS and not like the Chinese servers or whatever. Like, they used it because, like, they offered something that people wanted to pay for and wanted to use. And I think, like, that I, I think, like, what's just so special about reserve is like, it's, it's so easy to be like stuck in Defi and feel like, okay, eventually we're going to create technology that means something to somebody. And until then, like, we're just here to gamble and speculate on the way. But like, like, you guys found a way to take just the really basic stupid stuff that we can do on chain and make it relevant to people in the real world. And I think that's very cool. **Speaker C:** It's actually, it's funny. So the team used a very traditional tech approach of testing the hypothesis early. And so they did it by taking our beta, you know, our test version of the protocol, which was just a stable coin with diversified backing. It didn't have all the fancy default protection or the yield or anything like that. And they took that and they went to see, like, okay, people that have 7% inflation a week in Venezuela, they don't really care about 2 to 7% a year in the U.S. like, that would be. That doesn't matter, right? So, like, let's just go test out stablecoins and see if those are the people in Latin America want. Right. And so they validated that in 18 countries. And they're trying to figure out like any growing fintech, they're trying to figure out okay, what's the next level of growth come from. But it's, yeah, it was fun to see and that was a big thing that excited me when I joined Reserve was that they care about actually helping people and solving real problems. **Speaker B:** Yeah. And now listen, like helping people is good and that's something that we should all like try to do and like hope for and blah blah, blah, blah, blah. Right. But what I just think it's not about even helping people, it's just about like creating products that people actually want. And I think like, especially in this like the most degen ecosystems that we're in, like, you know, I'm not trying to throw too much shade but like once you get like past Curve it like we are just so lost in creating products for other gamblers and like ourselves that it's just, you know that what Reserve's doing is, is different and it's different because like it is using crypto to solve a real world problem. And I think, you know, again I can, I can like keep going down on like why that's cool. But. **Speaker C:** You don't have to convince me. **Speaker B:** Before we kind of pivot into the more protocol stuff. And I really want to talk to you about how Reserve is using things like Curve and the infrastructure we have to supercharge the product. Is there anything worth kind of discussing on the platform and the off chain side that we didn't cover here? **Speaker C:** But yeah, so last week actually two new folks deployed new products on our platform. One is called Ethplus and It's a diversified LSD basket with some slight over collateralization incentives for 5% of the staking yield I believe goes to the over collateralization RSR pool. And so what are those people doing and why are they getting paid 5%? They are responsible for diversifying the basket over time. And the goal of it is actually it was launched by someone named Iridian who's super tied in with a lot of the different liquid staking platforms. And he's working on a liquid staking overview project with the Ethereum foundation and he's really excited to make this Ethereum aligned. Not only should these things shouldn't be basket weighted by the size of the lsd, it should be basket weighted by more about the yield actually and more it should be flatter like a more simple basket weighting. I'm getting stuck here that Makes it so that it's like in theory, as it grows it can actually help diversify the validators over time. And so super excited about that one that just launched last week. Also High USD hyusd, which stands for High Yield USD. It was launched by someone in our discord that's been in our community for a long time named Tom. And this one's really cool. It's backed by the goal is to have reasonably safe high yield in DeFi where 80% of it goes back to the holders of the stablecoin. So it's a yield bearing stablecoin that appreciates over time. Hopefully soon it'll be worth $2 instead of $1. But what it's backed by is actually Flux Finance USDC and Dai Flux Finance is a wrapper around tokenized treasuries. And so it's an interesting way that the F tokens actually have near treasury rates in defi. So it's like one of the biggest, deepest liquid markets that's been tokenized and now has this lending market that kind of brings that yield on chain. So it's partially backed by that and it's partially backed by curve pools, two of the highest yielding stablecoin curve pools. One is MIM and one is actually the USD curve pool. And so all of the rewards from these different yield assets are sold off periodically and distributed to mostly the R token holders and also partially to the RSR pool. I think actually for that one, the guy who deployed it, him and a team potentially as they grow it, are getting like 3% of the yield that's generated. So it's really cool. It's like a platform for entrepreneurs as well to test and experiment and see if they can build a sustainable business over time. **Speaker B:** So staked rsr, the whole concept behind this is people that are completely out, like they don't necessarily need to be holding the R tokens which are the basket of assets. They just have this separate token called RSR and then they stake it against the specific baskets. With the upside being that they get some sort of fees or value accrual. And the downside being that if something happens to the basket where something breaks peg and needs to be replenished, the first place that that comes from is by selling off the staked RSR to that pool. Is that correct? **Speaker C:** That's exactly right. The RSR holders can choose which R token they want to stake on and then in exchange for being the first capital at risk, deciding what the basket is and choosing how the revenue is split, they are the first capital at risk and so. Or they get paid the underlying yield rather. And so it's a. It's. Yeah, it's. It's a really cool aligned incentive, we believe, where the people that are making the decisions are the ones that get headfirst. It's a key part of the protocol design. And so in theory, over time in stablecoin worlds, people talk a lot about endogenous versus exogenous capital. And RSR is endogenous. It's capital from the system as opposed to the rest of the rs. Token backing is fully exogenous. Right. Luna is famous for having only endogenous capital. They didn't. Yeah. But the. What's, you know what we think is interesting about this is it's actually fully backed by exogenous capital, 1 to 1. And anyone can mint or redeem for that backing. And that could be like USDC nabe or whatever. But then there's this over collateralization thing. And over time, as these things are more diversified, that RSR becomes stronger and stronger over collateralization. **Speaker B:** Because what you're saying is that the over collateralization creates a buffer that protects your first, like the raises, the first capital at risk or whatever the. Yeah, yeah, no, that's super interesting. **Speaker C:** Yeah, we're excited for these to get bigger and bigger and hopefully the over collateralization will be stronger and in the case of defaults, it can be sold off at a more efficient manner. **Speaker B:** Yeah. Okay, so super cool. So we just kind of described how reserve is this kind of, if you will, meta protocol that has each of these different baskets and each of the baskets are like in some ways, like kind of sovereign, where they have their own like, rules and things that they can include and like quote unquote, like controllers. And so can you talk a little bit about like the. How like reserve coordinates between all these and. And just like give you a little bit more direction. Like one of the things that's like very exciting to me about reserve is that it's like one of the few protocols that has figured out how to use the curve game for like a real purpose. Um, and, and so like there from the outside, like I have this sense that reserve protocol like has some sort of either directly VECRV stake or VLCRV stake and has some bribeable assets. And like, definitely like wants to play these games to help these like individual pools, but I'm a little like trying to figure out how you coordinate between like the reserve protocol and specific pools and like how all that stuff works out. **Speaker C:** Yeah, so you're exactly right. We do have a big stack of VLCVX on convex and also SDCRV and VESDT and staked out getting all the different letters right. And yes, a big part of our, you know, at the end of the day it's a stablecoin platform and at the end of the day liquidity is very important for stablecoins. And so we're trying to figure out what are the most efficient ways to incentivize liquidity on curve. Where we think it's most easily and effectively incentivized. The curve. The curve tokenomics. I think one of the clever inventions of Defi that along with the amm. Right. The AMM is a truly novel invention of defi that didn't really exist before. It's just really cool. Anyone can passively provide liquidity. I think the curve tokenomics are similar. A lot of tokenomics are just full on inflation curve is very inflationary but there's this weird locking mechanism where the lock holders get these four different powers and one of those powers is deciding where the rest of the inflation goes. And so you mentioned the vote bounties as I like to call them and also the gauge voting every week and every other week on convex. And so yeah, we are planning this game. We see it as a big growth strategy to incentivize liquidity. As these things get bigger and bigger then they might be more useful in other ways like the eusd. The first stablecoin that was launched is already used by mobilecoin which is actually the group that launched it. Mobilecoin is an L1 privacy focused blockchain and they bridged USD there in order to use it as digital private cash. And they've got an app there that's actually, it's kind of similar to our app except it can be used by anyone around the world privately. It's like worldwide Venmo and it's like a great experience. The UX is so clean. It's an amazing product actually. And then the other big use is USD is held by Arpeg for the users and so all the users throughout Latin America and throughout Latin America on our app it's all USD under the hood. And so besides those two, it's all in the curve pool. And so our business model at the end of the day is we're staking RSR and participating in these pools just like everyone else. And so the higher the curve pool, the more revenue that accrues. **Speaker B:** Yeah, well, because it's super interesting as a strategic asset Just for brevity, I will refer to all derivatives as VECRV power. But like you can look at that as two ways. Right. You can look at that as like this is really important liquidity support for stable coins that get issued or this is like a really high impact or a very low cost way to increase yield on certain pools. Right. And maybe that's two sides of the same coin or not. But how are you thinking about using your VE CRV power to deploy it strategically based on these two kind of like different needs? **Speaker C:** Yeah. So we see the VCRV power accrued in different ways as one of the things that we can offer to people that deploy on our platform as a way to help grow their products. And so we don't need to deploy the curve pools. But actually very similar to how FRAX incentivizes equally across all the different pools. We're doing the same thing. We're incentivizing equally across all the different curve pools that have R tokens or reserve ecosystem assets in it. We have tested out the vote bounties a little bit, but it's kind of interesting. It's like renting versus owning. And at the end of the day, you know, when you, when you put up a vote bounty you're kind of that money goes away. So unless there's like a sustained stream of revenue there that doesn't just work for every business model. And so it's more efficient for us I think in the long term and strategic for us to own it and you know, just like any asset you can buy it and use it and sell it and that's what's pretty cool about it. And so it's like, kind of like cac, but it's kind of an investment but it's kind of, you know, it's like strategic thing. So yeah, you put it, you put it perfectly earlier that it's a bunch of different things all wrapped in one from a strategic asset. **Speaker B:** For a protocol tone there's like more reason, like there's so many reasons why it makes sense for reserve as a protocol to like go out and acquire this voting power. And I think that there's like a lot of interesting questions of like once you have it, like what are the interesting things to do with it? And like I love kind of what you're saying, which is taking a page out of like the FRAX BP book, which is like we're not really going to be you know like conscious and picking winners and losers or like letting RSR like do any playing real Games with this we're just going to be simple. Like if you put TBL in curve we will give you proportionately that like amount of you know, voting power. And I think that I guess is reserve working on building some like protocol owned liquidity so that you got that reserve is building a Treasury as well through this process. **Speaker C:** Yeah, we, so we have deployed some treasury assets into USD and we'll likely do the same in others. We. It's kind of interesting. We're still trying to figure out what is the optimal flywheel. You know got some plans. I won't share all the alpha on that front but we do have some plans on how we're going to try to test some different things out and optimize this game. But at the end of the day we do see convex and curve as strategic and staked out as strategic partners as we look to grow. Like you mentioned the revenue stream. **Speaker B:** Right. **Speaker C:** The interesting thing an R token could do that is launched is specify a percent of revenue to go to a smart contract that buys and locks CVX and always votes on that pool. Right. And so that could just be the 10% of revenue from this R token buys and locks CVX and incentivizes the pull over time. **Speaker B:** Something that just popped into my head is like when we're talking about actually like being able to create these pools, how like at what level of like technicality are you envisioning this happening? Is this like okay, me and my family want to create like Rex family coin and, and like it's like a consumer level thing or is this like like really, really deep behind the scenes infrastructure that like somebody like the, the investment bank that Goldman hired on this consulting project might use and then like no one would ever see it. **Speaker C:** It's interesting. We're trying to lower the barrier of entry. So actually go to Register app, which is the main DAPP explorer for our protocol. There's like a really easy deployment flow. Yeah, Register app, register your assets and if you go to the deployment flow it walks you through choosing a basket and you can select from a list. There's a lot of different parameters for sure, but we try to put in defaults and help people make decisions on what they're going through. So you don't actually need to code if you want to deploy an R token. And in fact two of the people that deployed them don't code. And so there is like a, you know, in order for a collateral to be an available thing for the protocol and for the protocol to know how to interact with that collateral, a collateral plugin does need to be written, but anyone can write those collateral plugins. And so, you know, if you do want to launch something that's like a special thing that we don't support yet, you can either talk to us and we'll try to write a collateral plugin for it, or you can write it yourself. And so we hope over time that more people will write collateral plugins for their own protocols. Because at the end of the day, what you need to understand is how that protocol works and how it should be treated in a default scenario. And the people that wrote the protocol know that the best. Right now, we're knocking on doors and figuring out how these things work at a deep level. **Speaker B:** Yeah. And by the way, like, anything you integrate with today, like, probably won't be there tomorrow. So, like. But I, I want to kind of like, move on to the lessons that you've taken from Latin America and building in the real world and that the unique perspective at least compared to, like, the rest of the, like, American insular builders. And so I would love to talk to you about that. But while we're still on this subject, how do you think about, like, fragmentation? And it's very cool to say that anyone can create their own stablecoin, but as we're talking about in Curve or anywhere else, that has serious implications on liquidity and on the experience of everyone is worse if every coin can't be traded. And so how do you balance this permissionless nature with just the realities of how economics work? **Speaker C:** Yeah, no, that's a. It's a super good point. I think there's. We've talked about this a lot and, you know, one of the things that we've talked about a lot internally and actually externally is we don't know what the best way to save your money is. We don't know what the ideal basket is. **Speaker B:** Right. **Speaker C:** In the future, it might be like real estate, stocks, bonds, some kind of hedging strategies, whatever. And as more and more things get tokenized over time, like, people can test out those different types of assets, but in the same way, I think in the same way that we saw thousands and thousands of ETFs get launched in the last 30 years, I think that this will likely be something similar. And we're trying to lower the barrier of entry so that that experimentation can happen in the defi world as well. And so of course there will be winners. Right. Like the spy ETF is much bigger than all the other ones. Right. There's going to be Power law winners for sure. But at the same time it enables people to build assets and launch assets and have these things that are used maybe in their app. A crazy example would be Starbucks launching a stablecoin where the yield from the underlying and you can imagine these branded stablecoins basically kind of like what Binance did with Paxos. There's a lot of interesting, kind of like smaller use case things that could be interesting plays. And so I don't know exactly what's going to happen. I've got some guesses. But then in terms of the liquidity thing, like Curve is becoming, it could be like the ultimate Forex exchange. **Speaker B:** Right. **Speaker C:** And they're making it so that you can swap between all these different pools as long as they're linked together in some way. You can make a trade from one low liquidity asset to another low liquidity asset as long as it goes through a bigger pool. And they're releasing the lower gas version of Tri crypto and trying to make these things more and more efficient. That I think are really exciting. **Speaker B:** Yeah, maybe the combination of this technology that we have in Curve and I'm not even talking about the emissions or the crv, any of that stuff, just what Stable Swap is and the fact that what our tokens are are not these things that have like this intrinsic value that's like hard that needs to be found in price discovery, but really are just basket of assets that have like real world value that like maybe this is a problem that kind of solves itself. And like, like I, I actually the, the world works in such funny ways. Right. Because like the USDC JPEG turned like literally sounds like the worst thing that could happen to our industry possible. And yet like every single conversation I've had about it is with someone who is like, you know what, it actually we got really lucky because like we were able to use this event to like show that our protocol works or that it doesn't work or that like we had testing and you know, all's well that ends well. Like that's really the, the true takeaway from USDC is that there wasn't a problem. Right. But I think it's just like really cool that. Yeah, I guess, I guess I kind of took us on a tangent here. But you got to like, it's cool that your, your protocol was active and like really out there when this happened and we could actually see like, okay, what are the implications of this happening and what does it mean? What does it mean? And so I don't know, I I don't know if you have any thoughts that you want to share from the USDC event that you want to share. **Speaker C:** Look, it was very stressful. You know I mentioned we were like I think our mark the market cap of USD was at 10 million and the way that like our protocol trades is with auctions and so we don't, we don't have control over it. We can participate in the auctions like anyone else can but at the end of the day we're like like really hope this thing works. And you know, we'd obviously done like extensive testing and had five audits but you know, there was just like a lot of nail biting. Like holy smokes, USDC depegged. We gotta make sure that like these auctions have to work. And so it was really exciting to see the auctions all work and you know, over time the protocol was able to re collateralize and so it was exciting to say but you know, we learned some stuff. We learned about what the realities of auctions on chain and the reality of, you know, what it's like to participate in these things and what it's like to build in a decentralized world where you're relying on third party tools that may or may not have great front ends. Like Gnosis auctions. **Speaker B:** Yeah, no, and I mean it's pretty like something that's like super cool but like very scary about crypto is like we, our whole industry and our whole technology is built on like you throw something out there with economic incentives and like just pray that it happens and like it normally does because like there's normally mev bots that are trying to get this like arbitrage and like it's fine but I mean especially like when push comes to shove and like you Thomas, your name was on the line. Like I get it man, I get. **Speaker C:** Was definitely stressful but it was also just so cool to watch like the protocol go through the steps because at the end of the day we can't control it. It's actually fully permissionless and censorship resistant. There's no master multi sig that controls everything. It's controlled by governance and governance can make changes but it has to go through an eight day cycle. And so yeah, there's like a scary but freeing aspect of that. Like we've tried to do decentralization from the get go and it's really, it's hard to build that way. It's slower, you have to think a lot harder, you have to plan a lot more and things just take more time because of governance votes. And so, you know, we're now in the stage of, like, if we want things to get upgraded or changed, we need to kind of go ask the community, hey, we think this should happen. What do you think should happen? What do you think? But anyone else can also put those proposals in. And so I actually think I've always admired the way that curve does this. I think that compound also does a great job. I've seen people ask Robert Leshner in Discord, like, when are you guys going to do this? And he's like, I don't know. Put in a governance proposal. We'll see if people decide to do it. **Speaker B:** And yeah, I think, like, this is a path I won't let us go down. Because I would really love to have a whole conversation about, like, governance and like, what, what real governance is. And like, you know, there's some protocols that will say that exact same thing. And it's like just total BS where it's like, oh, post it on the snapshot and we'll see. And it's just like, you know, none of this is real. And so I think there's like, there's a whole conversation we can have about that that we won't because we're running out of time. So before I let you go, like, the biggest thing I want to know is, like, the biggest thing I want to talk to you about is, like, in America, like, crypto is a. Like a technology that exists so we can financially speculate on it, right? Like, everything that is cool about crypto is. It's becoming more relevant, but it's not relevant to the American experience. Right? Whether that's like, inflation protection or, you know, like a. A very politicized and vindictive government or, you know, export controls or, like, whatever. Like, these are problems that Americans don't have. These are, like, things that are, like, academically and intellectually there for us, but, like, we don't. The American experience is, like, so unique, and it's so unique to crypto. And so, like, with. With our final time, I'd love to ask you, Thomas, like, you're building products for people that, like, crypto is actually meant for that. Like, when Satoshi made this, it was for, like, the people in Latin America who are at the whims of, like, these old guys in Washington who, like, at the end of the day, like, they're going to protect the guys like you and me. And so I. Two part question one, like, what is your biggest takeaway for building for, like, these kinds of people? And in these kinds of societies. But two, like what do you think the biggest things that like builders should learn from those spaces that like people that haven't had those kind of experience and haven't been exposed to those kinds of problems like just totally miss. **Speaker C:** Yeah, so it is interesting and it sounds like super simple, but I think that the big thing is just solve people's problems and don't get distracted on the tech. I'm kind of repeating myself, right? But you mentioned all these things of America versus the rest of the world. I do think that crypto has been solving people's problems in the US just in a much smaller way. Like people have bought homes with maker. Right. You know there's like same thing with Alchemyx which is like a pretty interesting unliquidable repaying loan, self repayment loan. That's like a cool thing that people are able to do only because of these things. But yes, focusing on like realistically solving the UX problems to accessing these products is I think the big thing. And so like at Reserve 4, three years ago when the app was launched there was a big decision, do we make this on chain or off chain? And they chose off chain because the reality of paying for something in a country where it might not be that safe for people to know how much money you have is that on chain Solutions at the time just weren't there. And so do you want the cash register, the person behind the cash register to know how much money you have in your account? Probably not. Do you want the guy looking in the window to know? Probably not. And so we made the trade off decision of we're going to build this app off chain. So that's one example of just fix the UX and don't necessarily do the visionary tech. At the same time though, don't take shortcuts that make it so that you can't ever get to the decentralized thing. One of our core things is that currency is stable. If it's not controllable by these centralized parties from day one, it's permissionless and censorship resistant. We can't touch the protocol. We can adjust it, we can upgrade it, we can release a new version, we can propose governance changes, but people should be able to have a say in how it works. And so that's another big thing is like don't shoot yourself in the foot with some short term decisions that you can't roll back. The other thing is because all of the front ends on the protocol side, one of our core users in the beginning is Defi users, right? And all of the front ends are so spread out, whether it's Defi Llama or Coingecko or Zapper or Debank or all these different things. Honestly, building a network is really useful and so being able to reach out to the team at Zapper and ask them questions about how do we get our thing listed really useful. We were joking a bit before we started recording on hanging out in the discord, talking to random people, that could actually be really useful. It can be time suck for sure, but building some connections that you can build a relationship and reach out to someone and get some help on something is really valuable in a decentralized ecosystem. I think those are. If I'm going to put on the advice hat. **Speaker B:** Yeah, I think, I think that that's so important in this space and in life. It's just like the. The world's so small and like, all you have is like your reputation. You know, you're born into this world naked. You'll go out naked. Like, all you have is like, the things that you do and the people that like, see you do it and like, want to be around you. And you know, at the end of the day, like, what else are we doing here other than like, that is what building is. It's always like, about people and not about things. And so, I mean, that's why I love Reserve. It's because it's like it's real people that have real problems and like, they need your tech and. And like, I'm just so proud of you and excited for you that someone's doing real work. **Speaker C:** Thank you. I really appreciate hearing that. **Speaker B:** Before we wrap this up, any plugs or any where can we find you on Twitter? Anything that you want to shout out? **Speaker C:** Yeah, sure. So I mentioned our dapp, which is Register app. You can go and check out and deploy your own stablecoin there or see the ones that have been deployed, you know. Follow me on Twitter matamost M A T T I M O T t like Matamor, but a little bit more. And then, yeah, check out. If you know Curve fans are listening to this, check out some of the EUUSD high USD or ETH plus curve pools that'll probably be around in a couple weeks. **Speaker B:** Cool. All right, man, thank you so much. I really appreciate the time and we'll talk to you soon. **Speaker C:** Sounds good. See you, Rex.