Our guest today is Thomas Mattimore, who heads the Platform team at Reserve Protocol. Reserve is on a mission to help people fight inflation through DeFi. They are building a protocol and an app that abstracts away the complexities of yield farming in a decentralized and transparent way.
In this conversation we explore, how Reserve works, what makes them unique, and how this model is helping users in Latin America have access to USD-denominated savings. We also dive into how Reserve uses its built-in mechanisms to mitigate risk and align economic incentives.
Welcome everyone to Degen Responsibly. This is a series by Exponential DeFi, where we're on a mission to bring rationality to the space and make the industry more accessible to more types of investors. In this series, we explore some of the latest and best protocols in DeFi, and together with their builders, we go in depth to know what makes them unique, what is the problem that they are solving, and also some of the risks that you as an investor should be looking out for. Today we have Tomas Mattimore, did I pronounce that correctly? Head of Platform and Preserve, as our featured guests. Yep, pretty close, pretty close. Nice, awesome. So I don't want to speak on your behalf, so if you can introduce yourself to the audience, that'd be great. Yeah, sure, so my name's Tomas Mattimore, like you mentioned, I'm the Head of Platform here at Reserve Protocol. The, you know, Reserve is a, our mission is to fight inflation and help enable access to a stable currency worldwide. And so, you know, a big part of that is hoping to, you know, foster and develop those stable currencies. And another big piece of it is helping people get access to it. And, you know, we do that with our app throughout Latin America today and hopefully worldwide soon. And yeah. Nice, nice. Yeah, we can go in depth into how Reserve works, the stable coin, and some of the interesting use cases you've been enabling lately. But first, the question that I always ask is, how did your DeFi journey start for you personally? Yeah. My crypto journey. Let's see, so eight years ago, a friend sent me a Christmas gift of $50 of Bitcoin. And it forced me to figure out what the heck Bitcoin was. And yeah, from there, I went down the crypto rabbit hole. And for the last eight years, it's always been a hobby to understand, you know, like what's going on in the space and what are the different things that are happening. And, you know, I remember I used a DEX when they first came out in like 2019, I think. It was a really early one that doesn't exist anymore. And then what really got me going, you know, it was always like a hobby. And then my background's in fintech and I've been working at mostly fintech startups for the last 10 years. So it was always interesting as like a potential future thing, right? Like in the future, it'll be amazing when everything's on blockchains. And then I used MakerDAO in 2020 and for the first time actually got a loan. And I was working in consumer lending at the time and my mind was just blown. It was, you know, like a nominally large amount of money and it was a couple clicks. And two minutes. And, you know, like, and my lending company at the time is one of the larger consumer mortgage companies in the country, in the US. And we had 10,000 people and it took 30 days to get a mortgage. And, you know, we were one of the more automated players in the space and it was still like really, really painful. And, you know, obviously Maker, like margin over collateralized loans are very different from mortgages. Yeah. But even if you look at something like opening a brokerage account and getting a margin loan, it's still significantly easier with Maker or Aave or Compound than it is with Robinhood, right? Like you still have to open up an account and do KYC and do it and all the AML stuff and then deposit money, which takes five days and, you know, like all these different things. Yeah. Like, it was just a mind-blowing moment for me and it really prompted me to dive deeper into DeFi in particular. And so that's been like an insane curiosity area for me for the last two and a half years now, which is kind of crazy. Yeah, no, that's great. Personally, I got started to DeFi similarly, have background in finance and tech. So it's, you hear all of these stories where you just go, you scratch a little bit the surface and very quickly and suddenly you're down the rabbit hole. It's exactly right. There was, so that was like scratching the surface, right? And then, so what really got me was the, I just think it's like a disruptive technology because the automation of a lot of the operations aspect. And so- You must have been like, what is this origination process? Yeah. It's a couple of clicks. Exactly. And, you know, so the crazy stats for me were, there was, you know, like 10 or 20 people that built Maker in the beginning. And, you know, I was looking at, I was on like a 500 person product and engineering team. And then, you know, like, and then if you look at Coinbase versus Uniswap, it was actually pretty crazy. They were doing similar trading volumes. And, you know, Uniswap at the end of the day, it was the original code was written by one guy. And, you know, there's like thousands of coins at Coinbase. And so like, yes, fees are higher, it's slower. There's, you know, more slippage, like all these different, you don't have to worry about impermanent loss if you're an LP, like all these different things, right? But like over time, my big hypothesis is that those UX considerations will get better. And this is like massively disruptive technology that's just gonna flip traditional finance on its head. So that's what, that like, that key thing is what really prompted me to dive really deep and then eventually work on it full time with Reserve. Nice. Yeah, that was my next question. When did you decide it was time to go all in to DeFi? So looking back at it, it's easy to be like that moment, right? Like I got that loan from Acre. Yeah. But yeah, like as I learned more about DeFi, I realized that, you know, that it was something that I was just obsessed with and wanted to learn more about and spend all my time on. And so I started trying to figure out where I wanted to dive in. And, you know, I had three big things that I was trying to optimize for, like my backgrounds in product management and, you know, I'm always trying to think about like, where is the product market fit and where is it gonna be easiest to grow, right? And so my, one of the big things that I, another big hypothesis is stable coins are actually useful right now. It's the most useful product in crypto. And so I wanted to, you know, do something that involves stable coins. The other big thing is, where is crypto actually useful? Not in the U.S. Like at the end of the day, the U.S. like- Interesting thesis. Yeah, like I don't know where you are in the world, but like in the U.S. like our bank accounts are pretty good. We can get a mortgage if we need it. I can open a brokerage account and buy any stock I want. You know, like I can hook up Venmo and send any of my friends money or cash app or whatever. I think it's pretty good, right? I'm not worried that the money in the bank account is gonna go away unless I spend it. Someone's gonna call it back. But if you go and look in, you know, a lot of Latin American countries, the currency itself might be inflating like crazy. You know, like in the U.S. we're worried about 8% year over year. In some countries there, they're worried about 6% week over week. And then, you know, if you have a bank account, you might not trust that the government's not gonna take the money out of it. You know, like we've seen examples of that. Like in Syria, people are holding up bank tellers to get their funds. In China, there's been run on all kinds of banks. It's been crazy. Argentina and Venezuela are great examples in Latin America. In Colombia, it's illegal to hold U.S. dollars in a bank account. Like there's all these like crazy things where people around the world actually just don't have good access to financial products that we take advantage of. And so, yeah, so that was the big third piece. And then, you know, I got connected with the reserve and it really like perfectly checked all those boxes. And the team is amazing. It's one of the smarter groups of folks that I've had the chance to work with. And so it's been, it was just like a perfect match. It's been a really fun eight months joining here and trying to figure out how we're, you know, launching and growing this protocol. Amazing. So I think that's a great takeaway into reserve itself. Yeah. So can you walk us through what is the problem that it is trying to solve and how is it trying to do that? Yeah. So I gave a hint to this in the intro and then I realized that we'd probably want to go deeper. Yeah. Exactly. So let's see. So in, so our mission is to fight inflation and expand access to stable currency. And we have a two-pronged approach today, which, you know, now I think seems like the obvious answer, but it was something that it was arrived on iteratively. And the two-pronged approach is on one side, we have the protocol team that's focused on, we recently launched a platform that allows anyone to permissionlessly launch and govern a fully asset-backed, yield-bearing, over-collateralized stable coin. And then on the other side, we have an app that allows anyone to use stable coins and get access to stable coins and use them like they would normal financial services. So the app is, you know, it's live today in six Latin American countries, expanding worldwide over the coming year. And it allows folks to go fiat to stable coins and then use those stable coins, like pay at the store, get paid by their company. We have over 30,000 merchants and 700,000 registered users. And so there's like $300 million of monthly volume. And what's really cool about it is it's like real economic transactions and not speculation. You know, it's like payroll, it's people paying at the store, it's someone sending their friend $5 for the, you know, splitting dinner. It's people doing remittance to the US. It's like all kinds of different things. And, you know, like most of crypto for the last eight years, since I've been following it, it's all speculation. And so it's pretty cool to see like real world usage. Yeah, exactly. So to summarize, there are probably two parts to reserve. One is the protocol and the permissionless layer where anyone can launch a fully collateralized, let's call it stable coin. And the second aspect is your own RSV token or RSV stable coin that people are using for real off-chain or offline economic activity for peer-to-peer transfers and other sorts of like real world payments. Yeah, that's exactly right. And so the protocol team, we launched the RSV stable coin a couple of years ago. And it didn't do all the things that we wanted, but it did a couple of things really well, which is to diversify custodian risk. Okay. And RSV is the stable coin that's live in the app today. Yeah. And it's what the app uses for stable coins. You know, it's kind of interesting as people don't, a lot of our users, you know, don't really even know everything's crypto. They just think it's dollars, which to a certain extent is true, right? Like if a stable coin is backed by like USDC or BUSD, things like that, like there's just dollars in a bank account somewhere that has a couple of different layers of code wrapped around it. And then you see it on a screen in an app, right? And that's actually like really similar to an account at Citibank. Yeah, or using Venmo to pay your friends or settle. Exactly. These apps, yeah. And so like people don't care about the crypto part of it. They just care that they can have dollars and save and use it, right? I think that's like a key thing that we learned over the years. And then, yeah, and so then also though, what we recently launched a month ago and is this platform that allows anyone to create a stable coin. Because what we realized is we're trying to figure out how to fight inflation. is that we don't really know what the right answer is in terms of what should the basket of things be that can grow and preserve wealth over time and hopefully create wealth as well. And we just don't know the answer. But we have this hypothesis that the hive mind of the internet and the hive mind of free markets can help us find that answer. And so we launched a platform that allows anyone to define what that backing should be. And the backing can be any tokenized asset today. And then over time, we're hoping that there's a winner that proves to be the best one. And so like, you know, if you think about how most people store their wealth, it's in like a basket of diversified things across real estate and stocks and bonds and all those things. And like none of that's tokenized yet. In 10 years, it might be. But today it isn't. And so like today, what's supported by the protocol actually is things like Aave and Compound and like USDC and Aave and Compound, et cetera. We have a Gitcoin hackathon that actually ended today, which included a ton of different collateral plugins across DeFi. If you go to the top 20 on DeFi Llama, it was probably a collateral plugin. Nice, nice. And so things like Convex and Uniswap and all those different things. And so, you know, the idea is that anyone can figure out what should their yield bearing basket be. How should a currency be backed? Interesting. So I think you're touching a lot of topics, but let me try to recap and see if I did a good job recapping. The main goal is to help people fight inflation. And so the first way that you're doing that is by enabling USD-based payments and savings in countries in Latin America so that people who can't have access to financial services in dollars and escape their maybe highly inflationary currencies have access to USD-based or a USD-denominated account through stablecoins. And the second part of that is more broadly or broader in which you're opening, let's say you're opening up the kimono and the secret sauce in how to create a collateralized stablecoin so that the hive mind of crypto Twitter and the internet says, this is like the right index or the right composition for a stablecoin that actually preserves value over time. Exactly. Awesome, awesome. It's quite a big feat, especially in these times, especially this last year when inflation really picked up in the collective mind that, oh, we should worry about that as well. It's been an interesting year for a variety of reasons. Yeah, yeah, not only that for sure. And so you also have your own stablecoin. So we briefly touched upon it, which is RSV. Why have a new one instead of using an existing one? Yeah, so it's interesting. So RSV was like our beta and we intend to deprecate it over time and replace it with our tokens, which are the things that, which are the currencies or stablecoins that can be launched on the platform. And we still intend for that to happen. But what was really interesting was allowed us to test something, which was, is it valuable to have a basket of things back in a stablecoin that allow people to transact with something and the network effects to grow, et cetera. And then over time, the diversification is actually a safety mechanism. And the ability to update it is actually a safety mechanism. The hypothesis was that we might need to change the backing. And so in the, you know, like over the last month, as the FTX thing happened, we actually did end up changing the backing to what we thought is the safest backing available on DeFi right now. And so we swapped out one of the old stablecoins that was backing it. It used to be three, now it's two. And went with the two most audited, highest market cap stablecoins. And, you know, I think what it really illustrated is that like companies change, markets change, et cetera. The basket that we chose three years ago that was seemingly the safest then might not be seemingly the safest now. And so that ability to like update the backing of something without, you know, forcing people to change how they save or keep an eye on the market and all of that, like having some people that are governing this thing and thinking about that all the time and responsible for updating it and separating that from the users, right? Like grandma doesn't want to care about what stablecoin she's using. She just wants a stablecoin, right? And so like the Arpay app, like the Arpay app didn't have to do anything. It didn't have to update the token it was holding or anything like that. We just swapped out the backing. And so, you know, obviously there's like things that you need to think about with that. I'd love to go into how the protocol, the R tokens on the protocol are like governed and why we think it's a good design and things like that. Because governance is a crucial part of this. But I think it did, you know, it kind of like proved the design right in that, you know, like things change and it's important to be able to adjust over time without losing the network effects. Yeah, so it's almost like giving the user or the holder of the RSV stablecoin a promise to say, this will be redeemable for dollars. We'll worry about the backing. Yep. So for the user who maybe is not even tech savvy, they just want to have access to a US dollar denominated account, they transact freely and almost without any worries. And on the other hand, the protocol and the protocol governance is worried about how to keep that backing the best way possible by switching the collateral assets, as you say, from three stablecoins to two stablecoins only and different types of stablecoins or maybe switch the revenue generation part of it. But for the user is all of that is abstracted away. Exactly right. And, you know, if you think about like how a money market account works at a bank, right? Like the bank is going out and like making loans and all that different stuff. Users don't think about that. All they see is dollars on their screen in their bank account when they log in. Right, and they don't have to worry about how, you know, the sausage is made, right? Yeah, it's a good analogy. The bank will do reverse repos, overnight loans and whatnot. The same thing here. Exactly. The protocol will do a bunch of DeFi, invest in a bunch of DeFi forms. But at the end of the day, the user only sees dollars in their screen. Exactly. Nice. I think that also is a good entry point into the app. So you guys have an app, as you mentioned, you have over 700,000 registered users for your account. What are these users doing with their app? What are the sort of things that they are trying to do? What type of feedback have you gotten from them? Yeah, folks are, let's see, they're doing a whole bunch of different stuff. And, you know, something we've realized actually early on, was that it's hard to predict what people are going to do with money. Interesting. Yeah, like when we launched a couple of years ago, one of the first things that people did was actually go from dollars to boulevards in Venezuela. That was like the main first use case, is people were trying to get money into boulevards to spend. We're like, what? Oh, so off ramp. Yeah, it was an off ramp from dollars to local fiat. It was kind of surprising, but it made sense because people wanted to, they'd been like earning money internationally because the local economy wasn't doing well because of the hyperinflation. And they wanted to get those funds that they were earning on the internet into their, you know, to buy food, right? So they were like remittance recipients almost. Yeah, well, a lot of it was, you know, themselves working, earning in dollars, and then just trying to figure out how to get those dollars to boulevards. And so that was really interesting. Another thing was we were worried about our ability to, you know, we were worried in a hyperinflationary environment, can you actually make both sides of a market? Like, will that market work? And, you know, kind of related, we realized there's actually a lot of demand in that environment for the local currency, despite the hyperinflation, because businesses need to pay back loans. And those businesses needing to pay back loans actually, you know, outweighs the people that are trying to flee the hyperinflation for like personal savings. And so that was another interesting learning. And then, but generally in terms of what do people use the app for? They use it for, you know, everything. Companies are paying their employees, businesses have the same problems that, you know, individuals have in terms of trying to preserve spending power. Yeah. And so companies are doing the same thing. People use it for saving, people use it to, as we use Venmo in the US, people use it to, actually we recently added the ability to buy Bitcoin and Ethereum. And so, you know, people are using it for buying and saving. The app team, you know, also just to clarify, I focus on the protocol and I have a lot of context on the app, but not the full context. That's what I'm talking about. Yeah, makes sense, makes sense. But yeah, people are using it for like everything that we use, you know, a combination of like banks and Venmo, et cetera for. But they use it, you know, powered by stable coins. Yeah, that's amazing. And do you know how they become aware of reserve or how, yeah, it seems like such a, in general, DeFi is still a niche segment. So for anyone in Latin America to say, oh, I might as well spend dollars for this new app, seems a bit like a long shot, but you guys are doing it. Yeah, it's funny, you know, like I mentioned, people, a lot of people don't even know it's crypto. And it's been a lot of word of mouth. And, you know, there's like stickers up in the stores, we accept reserve. And, you know, friends telling their friends and families telling their families and then stores signing up because people come in and be like, hey, we wanna pay with reserve, right? Like those are the types of things that have driven a lot of the adoption over the last two years. Yeah, so a lot of grassroots support from the users as well. Yeah, when your currency inflates 6% a week, you're looking for solutions, right? Yeah, I personally share that thesis that USD savings in emerging countries and countries with high inflationary currencies will be the killer, yeah, the killer use case for crypto globally, more so than game finance or any other of the, famous pieces in the last year. Exactly. Couldn't agree more. Yeah, and now are these users earning yield on their account? Can they earn yield with RSV? No, and is a good segue to the protocol action. So we are hyper conservative and like our number one focus generally is safety. And so on the upside, you know, what does that mean? Don't do anything that FTX was doing. And, you know, like joking aside, but don't expose anyone to like lending risk or things like that, you know, keep funds one to one. And we explored, you know, we've explored doing things like Gemini earn or things like that, but the reality is that those products are pretty opaque because you don't know who's taking out the loans and you don't know what's happening. Yeah, who's the counterparty. Exactly, and so you really don't understand the risk and it's kind of impossible to understand the risk, which the last year has proven to be a very important thing to understand. And even if the individual user doesn't understand it, you want the market to be able to understand it and to do the analysis because there are people on crypto Twitter that are gonna dive deep, right? Yeah, I mean, ourselves included. Yeah, exactly. I know, exactly. I would put you and me in that bucket. And so, yeah, so that's a big part of where the protocol comes in because the protocol can support not just like a straight stable coin. And let me actually explain the mechanism a little bit more clearly. But so, you define this basket for a currency on the protocol for an R token. And that R token can be backed with various yield-bearing DeFi collaterals. And so that could be like staked ETH. It could be the tri-pool staked on convex, things like that, Uniswap tokens of stable coins, things like that. And so then that yield can actually go to a couple of different places. It can go back to the R token holders in the form of appreciation. So like your dollar today will hopefully buy you the same amount of things. Your one R token today rather will hopefully buy you the same amount of things in a year. Yeah, the exchange rate increases over time. Exactly. It can also go to, it also goes to the staked RSR pool, which is like an over-collateralization backstop mechanism that protects against defaults, right? And so if any of the things in the basket default, then that staked RSR is the first capital at risk. And so they are the governors of the R token. People that choose to stake their RSR on a particular R token are the governors of the R token. And they're responsible for defining what is the basket or updating what is the basket, things like that. And also if there's any issues with the basket, they're the first ones that pay for it. Yeah, that makes sense. It sounds very similar to the other stability pool where you have the first lost capital that protects lenders in case of bad debt or, yeah. Yeah, and it's pretty interesting. It's important to make sure that those ratios are right. There was a similar mechanism with Maple, for instance, that I was actually trying to understand better this morning. But yeah, so these stable coins, back to the different types of things that we can support on the protocol, you could have something that is just like a very, like a backstopped and slightly over collateralized stable coin, which actually are, one of our partners, MobileCoin, announced that they'll be launching something called USD in the beginning of the new year. And that'll, it's pegged to a dollar. All of the yield goes to the staked RSR pool, et cetera. You can also have something that looks kind of like a high yield dollar, right? Where a lot of the yield goes back to our token holders. And so over time, it's worth more and it appreciates. And all of the lending that's done on chain is transparent. You can see exactly where the backing funds are held. You don't have to worry about who's doing the underwriting. You know it's held in Aave or Compound or it's being deployed into Uniswap or Curve Pools, right? And you know exactly which stable coins are in it and what, you know, all that different stuff is all transparent on chain. Yeah, all of that is on chain. And then, so okay, so you're getting this yield where like last year people were promising DeFi yield but they didn't show you how they generated it, right? Well, now you've got this wrapper around a bunch of DeFi products where you're, some of, if you hold this, you're essentially giving up some of the yield in order to get diversification, not worry about, you know, automation of the claiming and compounding. And then also someone to make the decision and pay for it if they're wrong on where the funds should be deployed. Should be deployed, okay. And so it's like a, it's kind of sort of, you know, it's like a DeFi version of, or rather the TradFi metaphor for it. I'm trying to choose my words carefully. So my GC would be excited with how I was speaking. Yeah, yeah, yeah, yeah. Don't get into trouble. A good metaphor in TradFi might be like a money market with, a money market account with like, you know, your insurance. Yeah, with a community portfolio, with a portfolio manager, without a portfolio manager, and delegated to the community. Exactly. And so, and what's cool about these R tokens, by the way, that are yield barren, is they can be sent and held anywhere, right? So they can be bridged to Arbitrum or Polygon for low fees or to MobileCoin, which is where USD is going to be bridged to, which allows anyone to, you know, transact privately with sub-quarter cent transaction fees. So they are ERC20, so they are fully composable by anyone who wants to use it. Exactly. However they want to. So they're, exactly right. And so that, like that, the staged RSR overprotection mechanism, that works no matter what. The yield distribution, that works no matter what. And so, you know, it could be held in an exchange account. And there, but they could still get this cheap, this transparent DeFi yield, right? Yeah, makes a lot of sense. It also reminds me a little bit of Origin Dollar, which we actually hosted a couple of weeks ago in this space as well. There's some similarities for sure. Yeah, but let's come back to Reserve. So if I understood correctly, anyone can create a new DeFi backed stable coin. So let's say I want to create, you know, ACME stable coin today. And so I need to buy RSR tokens to be able to be a governor for that new, new limited stable coin. And then I can decide together with other governors who joined in this endeavor, where do we deploy the collateral across DeFi? So we sell the pitch to the community and say, to say this new stable coin will be, I don't know, a third Staked ETH, a third Convex Curve Pool and a third, a Yearn Pool. This is what we expect it will generate over time. And part of the yield will be paid back to the R token holders. Exactly right. So the holders, the governors have to put a stake in the RSR pool to be able to have that decision-making power. That's exactly right. Yeah, the decision-making power and the right to some of the yield from the underlying collateral. Yeah. Yeah. And does each, let's say governor committee have its own multisig to deploy the capital or how do, how are the R token holders insured against, let's say, moral hazard? Yeah, in a ton of different ways, actually. So in order to be a governor on a particular R token, you have to choose to stake your RSR into the governor contract. And then you get staked RSR in return. Those governors, their funds are locked for like two weeks at least, which is similar to how proof of stake works, right? Like you have to actually put your funds at stake in order to have a voice. And what, when you deploy an R token, what you really do is just define the basket and deploy the smart contracts. The protocol is a factory that deploys other smart contracts, very similar to Uniswap, where Uniswap is a factory that deploys trading pairs. And someone's like, here's the trading pairs and here's some initial funds, right? And then all of a sudden those smart contracts are deployed and then anyone can use them. It's actually very similar with reserve. When you deploy an R token, it deploys a staked RSR contract and a backing manager R contract and a variety of other ones that aren't relevant for this conversation or more make things work. But once those are live, then anyone can go deposit the basket and mint new R tokens of that type. And then vice versa, if someone gets R tokens, they can go redeem one-to-one with the backing. And so all of a sudden like that stable coin exists and anyone can go mint and redeem. Interesting. So the governor is only creating the design and deploying the contract, but you still require, let's say, other liquidity providers to go get the composition and mint the stable coin. Exactly. And so this is, you know, so like, okay, great. Who's gonna do that, right, is the next question. Yeah. And so there's a couple of things. One is we're actually working on some smart contracts that'll make it easy to zap in and out. So you can like, you know, put in USDC and go get all the things and mint the R token. So that'll be easier. And then two, you know, we intend to, we were one of the top 10 DAO CVX holders and we continue to accumulate voting power in the curve ecosystem. And so we are, you know, all of our voting power right now is going to the RSR USDC pool or RSR frac space pool, but over time, when a new R token is launched, we'll put a pair on a curve rather, and then vote to incentivize it. And so folks will go, you know, there'll be quite high APYs in the beginning which will incentivize folks to go do it. Yeah, that makes total sense. I have one last question before we open it up to the audience. Yeah. Let me check my notes. Oh damn, I missed it. Might as well open it up to the community. I think there was a question from Ramo. Let me give you speaking. Yeah, let me open up your mic. If someone else wants to ask a question, feel free to raise your hand. I'll open up your microphones. Oh yeah, I remember the question. Well, someone else joins. In the longterm, do you think most users will be holding stable coins or some sort of index backed stable coin that grows automatically over time like FBI or maybe an R token? Yeah. Yeah, so the question is like, will people be holding USDC or something like it directly or will they be holding around it? Yeah, like an R token. Yeah, it's kind of interesting. So I do think that there's UX improvements by wrapping these things in other smart contracts. And, you know, I think there was someone on the product team at Coinbase recently was asking like, I don't understand why don't people in Argentina escape inflation by just putting funds into DeFi and Polygon and yield farming? And I was like, well, I love DeFi and yield farming and it's still annoying to do that, right? Like you have to do a lot of research. You have to be like, you have to understand how curve works. You have to claim your rewards. Yeah, it's not trivial. It's not trivial, right? And like, even now as a person that loves yield farming and DeFi, I sometimes find it annoying to actually like do those things, right? Like I'm looking for a lazy solution. And so I just think from like a UX perspective, like DeFi itself. is an amazing set of financial tools, but isn't really something that mass people will want. But, if you wrap it in an R token, for instance, or something like it, then all of a sudden it gets pretty useful, and really easy. And if it's listed on an exchange, then all of a sudden you can auto deposit into it, right? And all of a sudden it's pretty interesting as a real consumer product. So, I don't think that USDC itself is a great consumer product. Like, people typically don't just hold, I mean, well, lots of people actually around the world hold cash under their mattress. But ideally, they like to hold it in a savings account where it earns yield in some way, shape, or form. And so, yeah, I'm rambling a bit, but generally I think that people gravitate towards great UX ways to earn yield on their funds. Earn yield on their funds. Earn yield, yeah, and have that return on their savings. Exactly. Great, so, Romo, you have microphone access, go ahead. Hey, are you able to hear me? Yep. Oh, hi, Tomas, thank you for the explanation. Super interesting. I was wondering, you mentioned that reserve app users are not exposed to yield. However, I'm wondering how is the reserve app, which is pretty much outside of DeFi, connected to the reserve protocol? So, for example, if I deposit $10,000 worth of fiat funds, are those then used to buy our tokens? Or how does that work? How are those two connected, if they are at all? Yeah, it's a really good question. I'm realizing I didn't fully explain that earlier. So today, if you were to put money into the reserve app, you get RSV, which is our current stable coin. The idea, though, is that over time, the rPay app will have rTokens, one of which might be pegged to a dollar, and one of which might have the higher yield. And so then folks can go and exchange their fiat for one of the two rTokens. Whether it's this, it might be EUSD, which is the one that I talked about that MobileCoin is launching. Or it might be a high-yield dollar of some sort that might be backed by things like Convex, Aave, Compound, Euler, et cetera. And so, in terms of how are the two things attached to reserve, the protocol is how we intend to help fight inflation with new products. And then the app is how we intend to expand access to those things to folks that didn't have access before. Yeah, that's clearer now. And then on the RSV portion of things, I'm interested on that UX side of DeFi that you were talking about. I similarly like DeFi, but I hate all the hoops that I have to go through every day. So, who's custodying that RSV if I deposit as a user? I'm not in any of those Latin American countries, so I can't experience it, but is that held centrally by the reserve app on behalf of the user? Is that insured? Yeah, I guess I'm trying to assess what the risks are of depositing my USV with reserve app. Yeah, definitely. So, it's essentially custodyed crypto app, just like any of the exchanges. The funds are held in a NASA safe, which you can click through to get to in the documentation. And it's really interesting. One of the big focuses at reserve is on making crypto useful. And a couple of years ago when we launched the app, one of the critical things to us was if people are gonna use this, they need privacy. Because if you are paying in person at the store and say it was like MetaMask or something, and it's on chain, then not only does the, like if you're paying for coffee, not only are you paying high gas fees, which totally wipe out the usefulness in some Latin American countries where it's like a 30 cent transaction and then no way are you gonna pay $10, right, if the gas is high gas. But if you pay for that coffee, then all of a sudden the store owner knows everything that you have in your wallet and that you've ever spent money on, as does the person in line behind you. And so we just thought that that was unacceptable, which is why we went, and there weren't great privacy options at the time, which is why we went for the sex design, the centralized exchange design. But we're always exploring different ways to make it self-custodied, bring it on chain, et cetera. Super interesting. Thank you, Thomas. Totally. Thank you. Harvesto, you have a question. Yeah, maybe he's connected. Yeah, sometimes Twitter space has- Can you hear me? Hi. Yes, we can. Yeah, I was logging for a bit. Hi, everyone. Hi, Thomas. So I have a contribution to make and a question at the end. So I didn't join at the beginning, but I think I got the general idea of the conversation, stable coins and what your protocol is working on and doing and how stable coins help to reduce the effects of inflation in certain places. So I'm from Nigeria. I stay in Nigeria currently, and personally, I love stable coins because that's what I've been using for the past one year plus to receive payments. It's kind of hard to, not that there are no ways, but it's mostly illegal ways to receive dollars here in Nigeria. The legal ways are very much restricted to a certain level of protocols. So stable coins, USDC, USDTD make it so much easier to receive payments, make payments and all of that. So I have a question for you, Thomas. I think at some point you made mention that anyone could, or you're making it possible for anyone to create stable coins with your protocol, I hope I'm correct. So the question is, if anyone can do that, how do we ensure that these stable coins are actually backed, when they are released for the general market, how do we ensure that they're actually backed with an asset and people are actually getting stable coins for their fiat? Thank you. Yeah, awesome, and thanks for sharing your story there. It's always good to hear that I'm not just making stuff up and that people are actually using stable coins. So that's awesome. In terms of how do we know it's always backed, so the smart contracts of the protocol will require that in order to mint new ones, people will need to deposit at least a dollar's worth of collateral, or whatever they need to deposit, as defined by governance. And vice versa, anyone can go and redeem in our token for its underlying backing. And so that's like the core to keeping something pegged is to have that low friction minting and redemption. It's how like USDC, for instance, if you're an institution, you can arbitrage USDC if it gets off price, and that's why it stays very close to price, because people arbitrage away those inefficiencies pretty quickly. And so we're expecting the same thing with our tokens. And so we define that anyone can always mint the one-to-one, and anyone can always redeem one-to-one using the smart contracts, and the smart contracts will maintain that over time. Yeah, that's a key difference that USDC or even Tether, only institutions are allowed to redeem, whereas something like RSV, anyone can mint, redeem. Yeah, exactly right. Yeah, thanks, thanks, Harvesto. And last question for Dollar, can't say the full name, Dollar question. Hi, can you hear me? Yes. Oh, thanks, thanks for taking my question. Thomas, I was thinking about what you were saying about custody versus self-custody, and privacy, and all that. And with this MobileCoin integration, I know that they do work with Signal and some other apps integrating their privacy chain. And I wonder if you guys had ever thought about that for Arpay? Definitely. Instead of a layer two or something. Yeah, yeah, yeah, definitely. You know, we're very close partners with MobileCoin and always exploring different opportunities on how to expand that partnership. And for years now, we've been exploring different privacy options. The big thing that the RPay team is figuring out is like, how do you prioritize expansion versus new features? But it's definitely on the table and a possibility in terms of how we could expand the app. Cool, thank you. Yeah, thanks for the question. Amazing, I think that wraps it up for this space. Thank you a lot for your time, Thomas. Thanks everyone for joining. Before you leave, don't forget to mint your pull-up. The mint window starts in about four minutes at 25 past. And the secret word is stablecoin-savings, stablecoin-savings altogether. So yeah, get to the pull-up app on your phone so you can get your nice pull-up under your belt. And again, thanks a lot, Thomas, for your time and great to have you here. Yeah, thanks so much for hosting. It was a lot of fun. Thank you. Well, see you in a couple of weeks. We will be hosting the 0vix lending protocol on Degen Responsibly. And have a nice rest of your week. See ya, man.