Michael: [00:00:00] Welcome back everyone to web3 weekly. The most relatable and reliable crypto NFT in the centralized technology podcast in the nation. In today's episode, I am blessed to have Jeff and Seth from Glo stablecoin with me today.
If anyone's wondering exactly what Glo stablecoin is, they are a nonprofit stablecoin that does a plethora of amazing things and before I dive deep into Glo stablecoin and we learn more about them, I would like to obviously introduce Jeff and Seth, my guess for today, so guys feel free to introduce yourselves and welcome to web3 weekly.
Jeff: Thanks for having us, my name is Jeff Malusky. I'm CEO of Glo and we're creating a stablecoin. It’s a non-profit mission-based stablecoin that's going to help generate basic income for people in extreme poverty.
Seth: And I'm Seth Green. I am not the actor, and this is my first podcast ever. I've worked in startups for about 6 years now and this is my first time in cryptocurrency. It’s been a lot of fun, and my title is researcher writer, so I do a lot of the research and the content.
Michael: Awesome. Seth, I'm happy to be your first podcast that you ever do. I'm happy to get your voice out there and increase your public speaking ability or anything like that. That’s my goal here. It's just to help everyone. You help me. I hope you.
It's a constant feedback loop if that makes sense, but I'm very excited to learn about Glo stablecoin, just because, especially in our introductory meeting you talk about all the good things that Glo can do, and how stablecoin, in general, can help people. Would you all mind giving a brief origin story? Maybe of Glo, maybe of the founding, and stuff like that?
Jeff: Sure, I'll jump into that. I come from an academic background. I was teaching economics, finances and some blockchain fintech courses at Creighton University. While I was doing that I met Sid Sabrandy a couple summers ago.
He's the CEO and co-founder of GitLab. He was working on some ideas around using cryptocurrency to generate basic income, so I met him, worked on a white paper, just added some thoughts, did some Consulting with those ideas.
We got to the point where Sid was a supporter of GiveDirectly which does cash transfers and makes income, and with this idea of, can we use a cryptocurrency to generate even more funds for supporting basic income programs, so we came to the conclusion that this is an interesting space to work in.
Let's create a startup out of these ideas. We got to a point where it made sense to develop a stablecoin, a fully backed stablecoin that is collateralized by Fiat reserve aspects, so US treasuries is the main type of investment there, so It's a very safe and stable type of stablecoin.
And then the interest income from that collateral Reserve would be used as a donation to programs that support basic income for extreme poverty. It's this idea of, can we build a scalable Solution to the big issue of extreme poverty, and we think we can do it with this type of cryptocurrency and using the blockchain to really scale it so [crosstalk]
Michael: I think it's really cool that you're trying to increase [unintelligible] [00:03:52] income and honestly just Improve the world, but I think a lot of people, including myself would want to know when you're doing this and trying to fix these world problems, why did you lean into cryptocurrency?
What made you want to turn to the web3 and stablecoin world? I know you mention the benefits of stablecoin, but what made you want to do crypto instead of any other type of funding?
Jeff: It goes back to the problem of extreme poverty and the current state of how programs that help alleviate poverty get funded. A couple statistics, if you look at what we estimate as the cost to give everyone a basic income, and we're talking about just alleviating extreme poverty, which is a daily income of $2.15 a day or less.
The estimate to get everybody above that threshold is around $300 billion a year, so it's a lot of money. This is over 600 million people living in extreme poverty. Now, if you're going to try to solve something on that scale, you would need to create an income mechanism, a donation mechanism that also can scale to billions and even trillions of dollars, so the way I look at it is what's a really really large Market? Money is a really large market. Everybody uses money.
It's trillions of dollars of potential growth, and what's the most efficient, or the platform that we can do as a small startup, a small team to really start getting traction and helping solve this problem? And it's crypto. It’s less crypto and more just BlockChain infrastructure. So, we see this as a way to efficiently build a scalable product that could potentially generate millions and billions of dollars of giving and helping alleviate this problem.
Michael: [00:05:55] Got it. I think it's pretty cool. I think a lot of people find it intriguing that you all did lean into crypto.
Especially with it being someone new and there's a new aspect to it where you all have the ability to express what stablecoins are, as well as the more and more people you talk about stablecoins with, the more and more people you'll be able to help if that makes sense.
Because it's new, it's like you're almost helping people get in early to help people. Does that make sense? You’re kind of starting a new wave of donations and Charities with stablecoins. I think that's really cool, and I think it's really admirable to see that you all are doing this.
Jeff: Yeah and I think– Seth, do you want to add some stuff about how we think about embedded philanthropy and passive philanthropy? This kind of new model?
Seth: Sure. The big picture idea of which Glo is, we think the leading example, is to take everyday parts of our lives and make them do good as a byproduct in this passive way.
So theoretically you could invest in T-bills, which is actually pretty complicated, we'll get to that, and then donate the interest and fill up the necessary forms every step along the way.
But what we do is we just make that whole process smooth. You buy Glo, we invest the assets in the reserves and assets that give a yield to us, and then we give that yield away. And the whole thing doesn't require active management on the user's part.
We think this is a pretty revolutionary idea. The stablecoins are a sensible Market to start with, but it has much bigger implications. Theoretically, a lot of parts of the economy could be remade too.
Michael: Got it. And how would you all describe the level of risk when investing in stablecoins? How would you describe that?
Jeff: The risk of a user buying a stablecoin is, there's multiple layers of risk. You have to trust exchanges. You have to trust payment providers. You have to have the ability to manage wallets if you're doing it through your own self-custody. That's improving.
There are trusted regulated exchanges. When Glo gets listed on those exchanges, it’s going to be a very trustworthy process. On our end, we're very concerned with doing a lot of work to make sure people trust us as an organization.
How we handle the Fiat Reserve assets, making sure the account holders, the customers we have directly, are able to redeem in mint in a very smooth and quick process. All that stuff is things we’re working on and we want to be very transparent with them.
And a couple examples here, is, we want to do real-time attestations to show people like hey, in the last 5 minutes, this is the amount of Fiat Assets in the reserve. This is how many outstanding Glo exist in the world for the market cap, and they should match in terms of being 100% backed.
There’s also this idea as a non-profit, we as a company, the people in the company have no incentive to take risks with customer funds, with the assets supporting the stablecoin. We have no for-profit mechanism that's going to put those assets at risk. I think it's a big differentiator when we compare it to other stablecoins in the market.
Michael: Got it, and for people that are anti-crypto, anti-stablecoin, and for people who think what is this fake money, how would you describe to them, or how would you fight back against people that are pretty much calling a stablecoin, or any type of crypto a scam. How are you all different, and to add on to that question, how are you all fighting the fact that the crash or the unpeg of you alls stablecoin? How are you all going to not let that happen?
Jeff: [00:10:18] It's important that we make sure people understand that there are different types of stablecoins, and at some point, I want to move away from the terms crypto and stablecoin, and just be like this is blockchain money or just money.
Blockchain, hopefully in the future we won't even think about it as the consensus layer or the payment rails layer. But the idea here is if we're going to use the term stablecoin, make sure they understand that there's algorithmic stablecoin, there's crypto collateralized stablecoins,
and then there's Fiat collateralized stablecoins, and these Fiat collateralized stablecoins themselves, some might be backed by a variety of assets and some, like ours, would be backed by 100% reserve assets of very low-risk trusted treasuries, US treasuries, Government debt.
So making sure people understand we are taking the lowest amount of risk to generate an income that's all going to be donated, so there's no incentive for us to not build on a process that's transparent and trustworthy there. So, making sure people understand this is a specific type of stablecoin, and we think it's the most trusted version of a stablecoin that can work really efficiently and scale to a really large amount.
Michael: I completely get that. I think it's important to, especially what I try to do with this podcast is that it's important to get the right information out there, and help people cut through the noise, cut through the news, because,
especially when times are bad in the crypto market, people love to hate on crypto, and when things go down people like to point and be like see I told you so, this stuff was never supposed to happen.
And I think what you two are doing is helping push the right message of what stablecoins are and the many different types of stablecoins that there are in this market, and especially like we mentioned previously, I tried to get the right information out there with this podcast.
Would you all, maybe, feel free to describe the different types of stablecoins and the importance of stablecoins, other than what just glo is trying to do?
Jeff: Sure I could cover some of that. So, quickly on the different types of stablecoins. I've mentioned algorithmic, and in a simple sense, algorithmic isn't backed directly by assets, so there's no value supporting its price.
Now there are some hybrid versions, but it's basically a mechanism usually done through code on the blockchain that manages a supply Based on the demand for the stablecoin in the market. Those have been really risky. We've seen the most recent large one blow up.
That was the Terra (Luna), so Tara USD stablecoin. The algorithmic part was tied to the Luna blockchain token, and, not to give all the details away here, but the price of Tara USD is supported by a volatile asset, Luna, so when the volatile asset loses a lot of value then the backing for the actual stablecoin in the algorithmic sense Will go away and the peg will fail, which we saw in a very big fashion with Tara USD.
Now another popular one is DAO, that's the maker DAO protocol That's a crypto collateralized Stablecoin. So, when we say crypto collateralized, It's all on the blockchain. It’s a smart contract that exists originally on Ethereum, and people can actually deposit crypto assets to mint a stablecoin, and usually, there's a little different variation now, but originally it was 150% collateralized stablecoin. Basically, if I wanted to put the value of my Ether has to be 150% more than the value that I get In stablecoin.
Now the problem there is, the backing could go below 100%. You could have issues around the supporting collateral value and that could be very volatile and lead to a de-pegging event in that sense. So DAI’s been pretty trustworthy. It's been a pretty good mechanism, but there is risk around volatility, Especially in crypto markets.
Now the Fiat Collateralized stablecoins. The one we’re building, similar to USDC, and similar to Tether; they take in customer assets Fiat dollars. They issue the stablecoin, and based on how they organize their business, they'll invest those assets in a portfolio of different holdings.
Circle has done a good job of being transparent, in terms of showing trustworthy holdings. Tether is a little less transparent, but they do say it's 100% supportive with different types of assets. We’re going to be even more conservative we're taking customer assets and basically saying in 3 months or less [Unintelligible 15:38] US Treasuries.
Super liquid, super trustworthy, and will be very transparent with that. So, there's different risk profiles between all these stablecoins, and I want to make sure that people realize we're doing the least risky format, and also is something that can also scale, and do you want to ask questions about that before I move on to the benefits of stablecoins?
Michael: [00:15:59] I have a few more questions about what Glo is doing with the money that is coming in but feel free to finish what you're saying, and I'll keep brainstorming some questions while you're talking.
Jeff: Okay. No problem. Let me touch on the benefits and how I see stablecoins growing too. What we're seeing in the last couple years is the scalability of blockchain increase exponentially. Basically, the efficiency of using a blockchain layer in terms of cost of transactions, and how fast transactions get processed.
That's been really really incredible to see people building applications on it. We think stablecoins is a killer app because it's that instantaneous or near-instantaneous settlement process with these highly scalable blockchains. And a couple examples we're seeing is USDC is being used for some cash transfers in Ukraine currently.
Companies like Stripe are Starting to adopt stablecoin outbound payments. The efficiency of transferring money to places that don't have banking infrastructure is a huge use case. All you need is a cell phone, connection to the internet, and you'll have access to a stablecoin network of banking in a sense.
It’s basically a more inclusive type of transfer value system and it's just like money, the rails are just different, and it's ubiquitous amongst the world because it's just on a decentralized blockchain.
Michael: Got it. I think it’s important. I've got to say thank you for giving a basic explanation of different types of staple coins. It helps a lot of people not only understand the difference of stablecoins, but also how risk-averse you alls stablecoin is compared to the majority of the market, and compared to other types of stablecoins, but for someone who's thinking about joining Glo, buying Glo, helping you alls mission, how would you show what you all are doing with the money, and how you all are actually putting money towards you alls goal?
Jeff: We haven't launched, and we don't have a market Gap out there yet we’re very close to it. This week we're doing a soft launch internally to test everything out, but what you'll see is anytime a customer goes and purchases Glo from our platform that's going to increase the market cap.
We'll keep those reserves in a bank account, and eventually, those cash assets will purchase US treasuries. Now we can make the account information public through an attestation process, And we're going to publish that attestation on a regular basis, like a real-time type of attestation.
It’s basically an API call to our bank account information. They'll show X amount of dollars being held in reserves, and then you can see on the blockchain how much market cap of the actual stablecoin exists. So that's a very transparent process. And then you asked about us actually getting donations, doing the donating part, doing what we're saying we're going to do, and we're leveraging an organization called GiveDirectly.
We’re not going to be the ones on the ground making those donations. GiveDirectly does cash transfers in places of extreme poverty, and they've been doing it for several years, but our whole purpose is to build the scalable funding mechanism and will let GiveDirectly as the experts on the ground, showing big impact, getting money to the people who need it. Seth, you've dug into a lot of what GiveDirectly has done. Can you give a little context around their expertise?
Seth:[00:20:02] GiveDirectly Is, in my opinion, an outstanding organization across the board. They are completely committed to what they call “unconditional cash transfers,” and what that means is, you get the money, end of story. This is opposed to conditional cash transfers, which is another branch of development economics.
Conditional cash transfers would be like, we’ll give you $100 if you get your kids vaccinated. Those are great. GiveDirectly’s whole thing is the unconditionalness because they basically think that people deserve to control their own lives. You give someone money, and they will decide what to do with it, and that's the most dignity-preserving way to help people.
They've been doing this for a decade now I think, and they've distributed, I think $580 million in Direct Cash to people already, and if you check out their website, their Twitter handle which is also GiveDirectly, you'll see some really amazing stories of how people have used cash transfers to Change around their lives.
For the most part, GiveDirectly has given lump sum payments to people, that's just $1,000 and then they track how it changes their lives. And In 2017 they started this small, like $40 a month. It was currently about $30, now it's $34, it cost $40 to provide it because of distribution costs, and so that money Goes to a person in extreme poverty In Kenya and Liberia every month.
So what this really does is it stabilizes incomes. People who do research into the economic lives of the poor, there's a great article called that, “The Economic Lives of The Poor" by Banerjee Dudloat, In case anyone is interested. One of the things they find is that income is very erratic for people in extreme poverty.
You might earn $5 one day, and then go three days without earning any money at all, and what the GiveDirectly program does, this is the one we're supporting, is if you are a part of it, you get $34 in the equivalent local currency, every month, for many years, and we think this has the potential to change lives.
GiveDirectly’s research is outstanding. They're also really good at transparency, so if you check out their financials page, you'll see how the money is actually being spent. And at the end of the day, this is a pretty simple model we're proposing. We're a stablecoin, we earn revenue from the assets in our reserves, and we're a major donor to GiveDirectly. That’s the whole story.
Michael: That's awesome. I think That's a great way to sum up what you all are doing if that makes sense. It’s just plain and simple, hey, we're here to help. We’re giving money to this charity, and the charity is doing this with the money.
I think that's a great way to prove your all's reliability, especially in this space with a lot of bad actors. Especially with what happened with FTX and the Sam Bankmen-Fried situation. There’s a lot of uncertainty, and a lot of people that are unsettled with the entirety of crypto, and crypto is in a weird space right now.
Especially with the current news, but I think it's nice to see someone different in this space like you too, and a different project like Glo that actually wants to help people, that wants to improve their world, and wants to give people some sort of basic income to kind of help improve their lives. That's all the questions I have for you all at this point.
I just want to give you all the floor, and let you tell the audience anything else that you think they should know, maybe about Glo, maybe about you all's dreams for improving the world. So, guys feel free to sing your heart out if that makes sense.
Jeff: Sure. I'll just kind of follow up on what you mentioned about the crypto world that's kind of in a bad place right now, and hopefully Projects like ours can help push it in the right direction. Fundamentally, mission aside, the extreme poverty basic income aspect.
If we can just provide a trusted stablecoin in the crypto economy. Something that gets massive adoption. Currently, the stablecoin market we're looking to compete in is over $100 million a market cap. If we can just provide that to this economy, I think that's a huge win with something that people can just trust.
They trust the organization, they trust the reserve transparency, and they trust who we work for partnerships. All those things are just… If we can build that model that's an example for the crypto world I would be super happy, and then everything in addition, the market cap growth, and people seeing it as a trusted stablecoin will add to the mission.
It's a passive philanthropy model. If this is useful just to use as a stablecoin, it's going to lead to more and more benefit for the actual mission to alleviate extreme poverty.
I do think that's really important because people don't have to donate to actually make a difference, they just have to use a different product within this crypto ecosystem, and hopefully, over time it becomes just a general form of money throughout the world.
Seth: [00:25:28] If I might add one thing. We've been talking a lot about crypto as a whole and no joke, you're right, it's been a tough few months. I joined this company in late April, early May, and since then we've had two serious ecosystem-wide collapses.
It's been crazy. I've never worked in an industry that averages up catastrophe every 3 to 4 months, so obviously, this weighs on us. It’s interesting, it's been chaotic, and I think a lot of people who are very skeptical of crypto, it's not my place personally to try to change their minds. I work in crypto because I think it's interesting.
That's really enough for me personally, but one thing you touched on Michael was, This idea that, you know, what are they good for? How do we respond to people who think every crypto is a scam, and one of the most common arguments we hear in this context is from people who think, where is the use case? What are people actually doing with crypto? And to us, stablecoins are a real use case.
We haven't touched much on this but first of all, decentralized Finance is new, it's exciting, it's potentially revolutionary, it's still very young. We're still getting a sense of what it's ultimately going to be, but no matter what that future looks like, I'm pretty sure that stablecoins are going to be an important part of it.
That there's going to be a need for some crypto asset that's tied to Fiat Reserves at some step up the operation. It doesn't have to be the centerpiece, but it's definitely going to be part of the infrastructure, and so long as that is true, we think there's a place for a stablecoin that generates Pro social results just automatically. We’ve talked a lot to some other folks in the crypto space who are trying to give the whole industry a good Sheen.
And a lot of what they talk about is what people called positive externalities. Things where you do your normal thing and someone else benefits in a way that you don't personally capture those benefits, but they're still out there, and you're making the world a better place just by going about your life. We think Glo is a pretty good example of a project that generates positive externalities. So, that's very exciting to us.
Michael: That's awesome. I really like what you all are doing. Like what you said, we’ve really got to switch the narrative on crypto, and one way you all are doing that is obviously by promoting Glo and trying to get Glo to as many people as possible to actually be able to help people, because the more people that know about Glo, the more people that you all are able to help. And I'm happy I'm able to help you all push that message by having you on the podcast today, and to kind of end it, if anyone listening wants to be able to follow you all on social media or LinkedIn, where can they find you? I'll obviously have the link in the description, but what are your alls social media?
Jeff: Are Glo Twitter account is just @glodollar. And then for LinkedIn, you can just search Glo, and the actual domain is linkedIn.com/companyglodollar, and it's easy to search it as well. We’re pretty active on Twitter, and making sure people stay updated.
We’ll be trying to get launch officially in the first quarter of 2023, and I want to just emphasize to, if you're a developer, somebody who's building in the space, the way this gets a lot of adoption is if you denominate your DeFi products and protocols, and if you use stablecoins, you denominated in Glo, and that kind of gets people using this in the ecosystem, so we'd appreciate that, and reach out if you want to talk because we really want to be a strong trusted partner throughout the entire ecosystem.
Michael: Awesome. Seth, Jeff, I cannot thank you all enough for joining me on today's podcast. I can't wait to get this podcast out there, and hopefully if anyone in the audience is listening today, and you want to support Glo, go give them a follow on Twitter go give them a follow on LinkedIn, and also go gloin, go join. Sorry, I mixed the Glo and join words together, but go join Glo.
Go support them any way you can. That's what I'm going to be doing, and thank you again for coming on, taking time out of your day. I'm happy to help push your all’s message, and if any one of the audience is really liking this podcast, really liking this episode, go follow Glo. Go follow Seth and Jeff, but also you can follow the podcast as well.
Your alls feedback is very very important to me, and the audience can also help me get more people on this podcast. Thankfully Seth and Jeff found this podcast and reached out, and it was amazing that I was able to have them on. And Just like what they did, you in the audience can do the same.
Feel free to send me a message on Instagram, Twitter, we even have a TikTok and YouTube. Feel free to email me. You can contact me on any type of social media or any type of contact, and I will be sure to get back because I love, not only learning what the audience has to say so I can improve the podcast, but also I just want to be able to get in touch and meet new people in this space.
That's all I really have to say. Feel free to share this episode with your friends. Feel free to leave five stars on Spotify. That would be an insane favor to do. It really helps us grow the channel here, but yes, Seth and Jeff that's going to be it for me. Do you have anything else you all would like to say before we head out here?
Jeff: [00:31:49] I appreciate being on the show, and check us out on Twitter, and reach out if you're interested because we definitely want to be a really big and positive impact in the space.
Seth: Yeah, ditto.
Michael: [chuckles] Awesome. Seth and Jeff, thank you again and everyone in the audience. I hope you have a great rest of your day. Thank you for tuning in and we'll see you soon. Have a good one guys [crosstalk]
Jeff: Thank you so much.
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