Leveraging NZDD as part of a Web3 Product & Business

Webinar Recording and Transcript

Date: 16/05/2024

Host: Kevin Whitmore - Web3 Lead/ Business Innovation Advisor

Guests: Paul Quickenden - Chief Commercial Officer & Patrick Ellway Commercial Manager, Easy Crypto

Webinar Length: 56:49

Paul & Patrick are 2 of the main forces behind the successful launch of the NZDD stablecoin in New Zealand in November last year. In this presentation they will walk through the challenges and background on the development and launch of NZDD.

They will then go on to talk about how NZDD can be used and optimised as a source for innovation and change for builders and developers as well as for the New Zealand business and wider public. The pair will get into use cases and how the coin works to inspire developers and entrepreneurs and then take questions from the audience to discuss what is possible using NZDD.

Kevin: All right, morena, kia koutou katoa. Welcome to today's session on leveraging NZDD as part of a Web3 product and business. Today we have Paul and Patrick from Easy Crypto and NZDD joining us, so I'll hand over to them in a second. First of all, just in terms of housekeeping, same as always, if you want to ask a question, please put it in the chat area, and we will start firing those through. There will be more of a formal Q& A session at the end. So, but hopefully we can sort of weave in some of those questions as we go and make it a little bit more interactive. We are recording this session and we have a quick survey at the end just to get your feedback and hear from you if there are any other topics that you would like to hear from as well. But otherwise I will hand over to Patrick and Paul.

00:00:56 What are Stablecoins?

Paul: So Patrick and I are going to do a little bit of a tag team this morning. He's going to be driving the slides. The general overview that we're going to run through today is kind of what are stablecoins, why did we build it, how do easy crypto use it. And then Patrick's going to talk a little bit about how we're seeing it being used in the market and how people can, can start using the stablecoin that we've launched.

So what are stablecoins? So there, there are three actually we're only covering two, but there are kind of three established models of launching a stablecoin. One is an algorithmic stablecoin. The most famous of which was Terra Luna and UST, sorry, and that cost everyone billions of dollars. So not many people are fans of those ones anymore. And we kind of aren't supported by regulation at all. Then you've got commodity backed stable coins which have got things like oil and gold sitting behind them as a collateral.

And then the one that's the most preferred in the market due to its liquidity and easily. An easy way to assess its value is dollar back or fed back stablecoins and that's what NZDD is. And the issuer, the company that sends it out, makes money by putting money in a bank and living off the the, the interest of from the assets under management sitting in the account.

The fiat backed stablecoins are by far the most dominant. You've got USDT, something like 65 percent of the market, USDC, large 30%, and then, you know, other non US stablecoins floating around as well.

So, why were stablecoins invented? So the genesis was that the industry, the crypto industry, was battling with banking, if we're really honest, it was just a general frustration with the fact that we operate in a 24 /7 world and the costs and delays associated with sending and receiving fiat into, into the crypto ecosystem was burdensome and. I'm sure we've talked about debanking ad nauseum and so that was another key driver as well. Once, once built, you know, Bitfinext and Tether was kind of the poster child for this. It kind of got adopted on exchanges so people were using it as a hedge against volatility. It was either the A asset to swap into something volatile or the B asset, getting out of something volatile into a stable, a stable asset.

You could do it 24 7 and then it kind of adapt, evolved and adapted and now it's a common instrument for sending payments. We know of several businesses that are paying their bills to foreign parties using stablecoins and then a whole ecosystem has grown up around it in terms of lending and interest payments on them and people are using it as a form of programmable money so escrow and those sorts of fancy services where smart contracts can deliver more efficiently than say having several lawyers and a bank in the middle just hypothetically.

00:03:49 Why did Easy Crypto build it?

Paul: So by way of background, so why did Easy Crypto build it? So first and foremost, like Easy Crypto is a lot more like a forex trading business than most people realize, and we trade a lot of forex. And because of you know, things like weekends and you know, banks being shut for the evening, there's a, there's a real, pressure point in our business after hours in banking times.

We also saw the growth in the stable coin market and you know, we're not a fan of New Zealand being dominated by US stable coins. I don't think that's a great outcome for us. And when we were kind of just early in, in our process, we did some trademark searches and we discovered that some of the US entities, the famous ones had actually started trademarking New Zealand dollar stablecoin names.

And so that was kind of a compelling event for us as well. At the same time, Easy Crypto was building its swap service, which we co launched, and so having a New Zealand asset priced at New Zealand dollars for swapping into and out of was one of our goals, and that's certainly been the case, and we've seen good take up of that service.

And then, you know, we, we kind of, you know, to use strategic language talk, we kind of felt like we were a natural owner for a stablecoin. You know, we've got a really big loyal customer base. And, you know, we wanted to, to see if we could take the stablecoin into that base and make it successful. And so that, that's part of it as well.

00:05:12 How do stablecoins work?

Paul: Then, so, how do stablecoins work? So, most people kind of only see the bit on the right where you go to an exchange or a training venue like Easy Crypto, you put in fiat or whatever out of the crypto and you get the stablecoin back, but there's actually a wholesale function that sits in the background, and so the issuer is the person with a bank account, they take in deposits in fiat and then mint tokens and send that out, and they typically do that with a small subset of wholesale investors, and they do big numbers.

And to, to make sure that, you know, they can scale it up appropriately. When you deal with the issuer, there is a guarantee that if you turn up with 100, 000 NZDD, you're always going to get 100, 000 New Zealand dollars back. And so there is, in the wholesale market, there is no price sensitivity. If you turn up with 100, you get 100.

The price variances that we all kind of experience sometimes happen in the retail market, where there is, you know, more herd like activity. And because of the slight lag between redemption and issuing, you can see demand curve change. And so you'll see, you know, USDT or USDC, you know, lose its peg occasionally, but that happens always at the retail end, not in the wholesale end.

The issuing company also manages any burn of token. So if you want to redeem the NZDD token and get fed out of the system, you send that to us and we'll burn that for you as well. So, building a stablecoin. The first, the first thing you need is a bank account. And that took a considerable amount of time but we were very fortunate to convince a, a local bank that, to support us in this initiative, and we're really proud to say it's KiwiBank. And they, they've been a really great supporting partner for us.

The second thing we wanted to do was structure it so it's not a financial product, because that's pretty onerous in terms of the compliance costs and product disclosure statements and all of the stuff that comes with a financial product. And so it's like all the other tokens that easy crypto lists.

It's not a financial product. It's structured in all such a way that it doesn't do that. We then had to spend, as you would imagine, quite a lot of time with the regulators, educating them what the stablecoin was, how it was going to work, how we were going to brand it, how we were going to use it that sort of stuff.

And then when we got to launch, we've been focusing on creating use cases and adoption for, for it. So how it's being used, how it's being sent around, how it's being traded, and we're still working on some listing and other use cases. And that's, that's a big part of what we're doing as well.

So the market has, like I said, been dominated by US backed stablecoins and that's great if you live in the US, it's not so great if you live in the rest of the world. There, in New Zealand it creates a double tax phenomenon, so you move from Bitcoin to a US stablecoin, you got to, that's a disposable event, you got to work out what your gain or loss is on that trade, And then because the U. S. and New Zealand dollar moves around, you actually have to calculate the gain or loss on moving from the U. S. stablecoin into New Zealand dollars as well. And so that's pretty onerous. It also creates a bit of forex risk. So you know, the New Zealand dollar relative to the U. S. dollar moved about 25 percent last year.

So, so if you're holding U. S. dollars, that was a good gain last year, but, you know, the expectation is it will move and it will go back. And so you, the potential is that, you know, your value that you've, you're storing will, will change as well. And, the second thing is, and we know this, cause this is what we do for a living, you know, actually getting access to US stablecoins with fiat, New Zealand dollars is not that easy.

There is you know, lots of conversions in steps to do that particular step process, and you know, it's kind of what Easy Crypto is built to do. And then, you know, we kind of agree with the Reserve Bank that there are sovereignty risks, like we, we're, The ability to control your currency, your monetary policy is an important thing to every nation.

And you know, we might not always agree with how they're doing it and the process they're going about, particularly if you're about to roll off your mortgage, but it is an important thing. And so sovereignty risks do exist if we all suddenly embrace US stablecoins and start, you know, paying our bills and doing all that sort of stuff.

So, you know, we're in fundamental agreement with them on that stuff. So I think that's my last slide, Patrick. Over to you.

00:09:30 NZDD

Patrick: Yeah, so, we built NZDD. We saw that the market really could use something like this. We're not thinking it's going to be revolutionary, we're not going to change it, but we think that this was a way that Easy Crypto could provide significant value to the New Zealand marketplace.

Very much in a way that, The initial thoughts, the initial ideas about this project were actually to build a tool that worked for internal use for EC that allowed us to facilitate our business operations outside of banking hours on the weekends as a retail facing business. We were on the horns of a dilemma, we can trade what is it, Forex during the day.

But most people trade their cryptos at night when they finish work or when it's Sunday afternoon and they've done their bills for the week. So, we were looking for a tool to essentially make our capital flow a bit more efficiently, a bit faster, ways that we didn't have to lock it up for if it was like a four day long weekend.

And there was often five days between us getting money overseas. And so, yeah, we wanted to do a stablecoin purely for our benefit. And then, yeah, we did a whole bunch of research that's covered in the previous slides. And we realized that if this is useful to us, it's probably actually going to be useful to a whole bunch of other people.

00:10:48 How are we seeing people use NZDD

Patrick: So, yeah, we built NZDD. So, I quickly want to cover off. I want to talk about how other people are using it, but before I do, I just want to talk about Easy Crypto. Easy Crypto is using this purely because we want access to global markets. We, the service we provide isn't buying and selling crypto at a very high level.

It is, don't, don't get me wrong. But it's actually allowing people to access 24x7 markets. We will always be a buyer and a seller, so if somebody wants to sell a Bitcoin to us at 2am on a Sunday morning, we're going to struggle to find a buyer within the country. We actually need to look externally, give appeal access to external markets, and thus, Using NZD some way to facilitate that monetary transfer is a really, really useful tool in our kit.

We are seeing a lot of other people though use NZDD in ways that we're not necessarily using it. And I think that's kind of, kind of the thing we've discovered here. And what actually made my slide really, really difficult is How are we seeing people use money? That is kind of really difficult to put into a single slide.

It's kind of really difficult not to commit the cardinal sin of chucking a whole bunch of words into a slide. But that's kind of where we're at with it, is NZDD is a platform and it's something that you can use in so many different ways. It's something that you can use Within any defi protocols you're using at the moment, but you can use it in kind of any, any way that you'd use money currently speaking.

So to specifically name a few of our favorites, and this is not an exclusive list, and that's kind of the point I want to make, but these are the big ones that we're seeing currently is obviously crypto trading. So both within the EC platform and then also externally to EC, we're seeing lots and lots of people use for crypto trading.

So EC is non custodial. We built a swapping platform so that people could move in and out of positions when they can't necessarily get money to us and they don't want to pay their credit card a bunch of percentage points to have the privilege of spending their money on the weekend. So we're seeing lots of people use NZDD as the other side of trading pairs, moving in and out of Bitcoin positions, Ethereum positions, essentially any of the 150 assets that EC offers.

But then we're also seeing a lot of people do this externally to EC with some Uniswap pools. those pools. Then people have been stringing a few trades together, seen a few people trying to up, and there was some really interesting stuff like that there. The next one is forex type transactions, and this is very closely related to crypto trading, but it's where we're seeing the denomination, the key denomination on the other side being another currency.

And this isn't necessarily because they see a trading opportunity, but this is more of the practical operations of people's businesses. They're wanting to move money in and out of the US to both easy crypto, but also our customers doing this. and then it goes further than that. We've seen people wanting to use it with a whole range of other different currencies.

It's not just the us, we talk a lot about them, but the world's a lot bigger than the US and NZDD provides access to the US, but equally it provides access to all of these other markets as well. One of our favorite companies in the New Zealand Web3 space is Pay it Now Pin. And they were a really, really early partner of ours.

They jumped on to not speak highly enough of those guys. If you don't know their platform, check it out. But they enable payments. Essentially, they've got a list of vendors and you can spend your crypto. You can take it out of the blockchain digital sphere. And that's the same with NZDD. That's something that we're actively working towards.

We're really, really proud of developing, is bridging the real world and the crypto world. How can we make the two kind of come together. I know I speak a lot about this just generally, but, we always talk about one side with fiat or crypto and stuff like that, and I think, realistically what we're going to get to a point is where they both kind of merge.

And Pay it now is doing some really, really cool stuff where those two worlds are just going to merge. People can be using crypto, people can be using New Zealand dollars digitally, and they don't even know it. They're really breaking into the payment space. There's some really exciting stuff happening there.

One of our, one of the actions that we kind of We weren't expecting, we kind of had it on our radar, but what's actually been surprisingly a large part of the, what is it, usage that we've seen so far is people that are employed by overseas companies. So, often these are contractors, especially within the crypto sphere, we see a lot of what we call digital nomads.

And for a lot of times they'll be contract to contract, they'll be being paid in stablecoins, And well, for tax reasons, it's actually really beneficial to be able to put at least some of the side into NZDD because of that double tax obligation and avoiding that. So that's actually been one of the larger uses we've seen there.

It's also been a large reason why people have been holding it. It's really good way of holding your salary without having to put it into a bank account. That kind of does touch really nicely at the next point. It's almost like we wrote it in this order. But yeah, we've seen people use it for their tax obligations.

So when you get paid, okay, cool. You might get paid in stablecoin, but. You still have to pay income tax on that. And I can actually speak from personal experience on this. It's really, if you're getting paid in a volatile asset, especially something where you get multiple pays, and multiple different prices at that asset received, it's really difficult to calculate your tax on that.

Especially if you don't spend all of that asset in that pay period, then you've got a changing cost base so NZDD kind of solves that. It makes those obligations even if you're just putting aside a bit of your pay a lot easier, last one was saying, and so this was a really, really difficult one that we kind of had to, we're still trying to figure out a way to make this work. And again, any one of these calls, those ideas, let us know. What more than happy to have this conversation. But we're seeing people use it to generate yield.

We can't provide you directly because that crosses that line of the financial product but we're still looking at it in really interesting ways that we can make this function more like a bank account, that we can recreate those experiences, that we can just make this Like what people are used to, we can make it normal, but with all the benefits of crypto.

So we're seeing lots of people put their money to work, putting them into defi pools, generating yield, providing liquidity. When you provide liquidity, there's this massive ecosystem boost that kind of happens because it's both good for People wanting to use it, but it also means that you then get financially rewarded for your contribution.

So we're really, really pro the providing of yields to defi pools and also the utilization of those defi pools.

Some of the use cases that we're hoping to see in the future, and we'll go a little bit more into this because there's a lot of discussions about a couple of people that are like got some really cool ones, but the couple of ones that we're really targeting, especially at the beginning was peer to peer payments.

You're at a restaurant, the bill comes out, they say no split bills, what do you do? Well, crypto, it's infinitely divisible, especially on some cheaper networks, on Manif, where it costs cents to make transactions. Peer to peer payments are something that we're really, really excited for. Stuff like micropayments, stuff where it's a few cents, where it needs to be fast.

Stuff that really doesn't work that well in our current banking system, but is just a world of opportunities in terms of making things more fluid, making things, Work better, making sure people get paid more often instead of having to tip $5. cause it doesn't make sense. What happens if every time you just, it's a little bit, it's just constant. It's just really quick. Small micropayments.

Gifting. We're actually really excited about gifting because I think it's part of. ethical finance is giving back and giving to those without necessarily an expectation of financial return. And we're really interested to see if people can make this into gifting products, if people can include this in ways that do potentially share benefit to those parties that deserve it. And then yeah, merchant and online payment services. This is kind of touching on what PIN does, but it's a little bit different stability just to jump on to like Amazon or Spotify. I don't Spotify, Shopify, and just make a payment there just as you would use your card, essentially any way you can use your card using NZDD instead.

So that's what we're really excited about. We're working with a couple of vendors to see if we can make it happen. It's not simple. It's not straightforward, but they're the types of challenges we like rising to.

And I guess that's kind of why we're here today, is we want to see more Web3 businesses adopting it. This was really, really meant as a project for Easy Crypto to give back, to Actually provides something to the New Zealand ecosystem that while let's not be too worried about there is the financial incentive there.

It's not a significant one and it's a way of us identifying that we have access to banking and we know how difficult that actually can be for a lot of people, especially startups. For banks it's often just a risk to return calculation. We've got this startup that's come along. Do we give them a bank account?

Well, it's not a huge proven financial incentive there. And thus, you can understand kind of when they're making a really logical, practical decision. That risk to return ratio just doesn't quite check out to that point, right? So what they do is they stop offering these services, or they offer restricted services.

And it makes it harder for these businesses to get started. So NZDD was a way of us, to get started. Essentially providing pseudo services like this to people to give them that kickstart to get them off the ground for those who can't get banked to actually have the ability to do really important stuff like pay staff.

That's a really big issue that we don't talk about with debanking is what about the staff members who have mortgages who have all that stuff? Well, this is our way of potentially supporting those businesses that do struggle with this stuff to support their employees. NZDD is meant to be a platform.

It's meant to be something that people can use to build, to create from the same way that you can use money and include that is including managing your financials. Quickly wanted to touch out a few of the use cases that aren't necessarily in market just yet, but we're really, really excited because they're on the cusp.

These are primarily coming from a grants program. So that's something I really did want to shout out to this group here. NZDD is part of this whole give back stuff that we've got running. We, I believe we're currently doing it quarterly. Might double check that though. I'm running a heat grants program as a way of helping businesses, helping Web3 natives integrate this product to help them get stuff off the ground that they otherwise wouldn't have.

Because while debanking is an issue, also access to capital is the other side of that coin. They're very closely related. So this is our way of. It's not it's not venture capital, it's nothing like that. It's not equity stakes stuff, but this is a way of us putting money into up and coming projects that we think are just going to provide value to the ecosystem that are going to be good demonstrations of our financial system moving forward.

So one of the really cool ones that we've seen is, and I won't give out the specific company names here, but it is a smart contract based automatic for ads. So this is going to the micropayments. So ads are cents per click. Lots and lots and lots of actions bundled together into really small amounts.

You talk about per thousand views, per million views and has to be like that stuff when we're advertising because the amount you actually pay per impression is so incredibly low. So I've been working with a company that's looking to do micropayments with NZDD, so real time flow of funds so you don't have to send invoices at the end of the month.

Per view, when that happens in that moment, you either pay for that impression or you get rewarded for that impression. And then the second one we're kind of talking about in terms of that smart contract piece is you're also using it as an escrow function. So capital needs to often be locked up and then it gets released on schedules based upon certain milestones or commitments.

The big one we see this in is the construction industry. This is going to make it hard for. Essentially builders for solo tradesmen to get off the ground because they need to put a huge amount of capital up front before they can begin to offer their services. And that's just a bit restrictive. And NZDD we see as a way of essentially lowering those costs, not getting rid of those capital requirements, they still exist, there's a reason why they exist, but essentially lowering those financial barriers to be able to provide services, to be able to get out and essentially build to work without these restrictions that our current system sometimes does put on people. The next one is a very, very interesting project. We've seen it kind of a few times is essentially carbon capture and carbon trading, trading of carbon credits and crypto actually represents a really, really good way of having a decentralized market, a market where people can offer carbon credits. They can generate products that do remove carbon from the ecosystem. And then those who are polluters can purchase them to offset their costs. One of the issues that we've seen is because there's often quite decentralized, it's hard to have a single centralized asset kind of pairing against.

And so we're working with the company at the moment to essentially create their, their products is, they want to create a decentralized marketplace for carbon crypto trading, and obviously they need to pair it against it. By pairing it against it, it means that these can be traded, these can be speculated on and essentially we can provide liquidity into this market, which has some quite significant positive externalities.

Integration of NZDD into merchant services. So this, the big one is, so say it was Shopify, right? You can have different payment portals you can build into it. Well, why isn't one of those payment portals crypto, right? Okay, well, Shopify wants to get paid their fee. It's actually kind of really difficult to do it without fiat. But those problems actually become significantly less with NZDD. It's a way that merchants can get paid out very quickly, very efficiently. But it also means that the stakeholders within that process, those who do need to be compensated for the services they provide, can receive that fund, those funds in the form that they want. e. g. in a fiat or fiat equivalent form.

Micro rewards for advertising. Again, I kind of covered this at the first one, because I think the smart contract usages of them are very related. And that's kind of a big point is now that you can have smart money, money that you know how it's going to react. And it's going to predictably react. If X happens, Y happens, very simple cause and effect. And that cause and effect can be scaled up or down. It can be big stuff. Like when we're talking about construction industries, where we're talking blocks of hundreds of thousands of dollars. or at the other end of the spectrum. Scale down more we're talking about fractions of cents that occur quite frequently quite regularly. It's a very flexible system that can be applied to pretty much any business regardless of your scale and regardless of the products or services that you offer, provided you use some form of medium of exchange.

Last one that we're going to cover off is International Billings Payment. You So one of the cool use cases, and it gets, this does kind of a little bit touch at smart contracts is auto exchange mechanisms. So set up a smart contract, it plugs into a defi protocol, you receive USDT, USDC, it automatically converts into something stable into your preferred asset class. That's a use case that we're seeing without NZDD, but NZDD provides a really exciting opportunity for those businesses that want to get paid in New Zealand dollars. But I want to deal with businesses that might not necessarily have it. They might be dealing with multinationals or those who primarily operate in a single foreign currency. Well, this is a way of automatically receiving payment in your preferred method. Without the headache that makes it just simple.

00:27:58 How do you integrate with NZDD?

Patrick: Cool. So this is the big slide. And I'm going to skip over some stuff like this here. Not really go into a huge amount of depth because we are again, talking to a quite technical audience today. But the big one I want to kind of talk about here is that NZDD is a tool. It's, let's say it's a hammer that you get from the, what is it, your local construction store, but it's more than that. And that's what we kind of really want to show here is that it's not just a tool, but you get access to people who are passionate about it. You get access to a community. You get access to people like Paul and myself. So a bit of context. I'm the project runner of this of NZDD behalf of EC. Paul is the business sponsor, and when you use NZDD, if you want help integrating it, if you want support, if you need that technical expertise, it's not like USDT or USDC or some foreign stable coin, we're actually people you can get in contact with.

We're people that you can talk through the issues you're having, if you've got questions, if you've got concerns, we're individuals that you can engage with that have really deep technical knowledge into the protocol, because we built the protocol, right? to help with your business. You access a really great product, but you also access a really great support network.

And that also would be a miss if I didn't shout out Web3NZ and all the work that Kev does is that this is a community, that this is going to be an ecosystem and We're really, really keen to support and help your businesses integrate a few kind of points just to cover up, just to actually tick all the boxes.

NZDD is an ERC20 by, on an EVM, EVM blockchains. So it's compatible with anything that already uses them. So it's got the standard transfer function. If you've built anything, the crypto kind of sphere that works on EVM blockchains, there's a very good chance that this will work with it. It's natively defi, so you don't actually have to do anything special for what is it, protocols and products that you can plug in smart contracts to.

There's no formal sort of restrictions. So for us, we use it with a whole bunch of smart contract tools, stuff like treasury management through on chain multi sigs or training protocols like Uniswap, NZDD is designed in such a way that there would be a frictionless integration experience, anything that you can just import a contract into.

So that there's a whole range of tools that already exist that work day one with NZDD theoretically and big, big, big asterisk because it really depends on your use case. But We really wanted NZDD to be a product that you could actually just pick up off the shelf, use the other bunch of off the shelf tools, and then actually to be able to service a decent amount of use cases.

Those who actually just want a simple, intuitive, to the point kind of way of transferring value. We didn't want people to have to build their own custom products, but we did want to give people that required that type of level, those options, essentially. We wanted to make this. A platform that you can build from, but you don't have to build from.

So some largest the five largest EVMs, so we're talking ETH obviously, BSC, Matic Arbitrum and Base currently. If there are EVMs that you want it rolled out to because of your specific use case, because that's where you natively operate, let us know, we're happy to do that. It's very easy for us to do, but again, we're happy to have discussions about where do you want to see this? Where can we put this that'll help you with your projects and your, the stuff you're building. Last one we wanted to mention is, and again, this is just for the simplified use case of where you just want to hold, send, receive. The three major wallets that we recommend you use this on is MetaMask, Rabi, and then obviously the easy crypto wallet.

I would be how do I say this? I'd get in trouble if I didn't mention our wonderful wallet that we just launched. I would recommend everyone gives it a shot a try and let us know what they think, what they think of it.

00:32:15 Future of Stablecoins

Patrick: Sweet. So we're kind of getting to the end here. There's a second last slide before we jump into questions, but this is just, we wanted to quickly touch at the future of stablecoins where we're thinking we want to take this just so that people can have a vague idea of what's our next three year roadmap.

So there's no surprises along the way, just as part of having that open conversation. Large increase in bill payments. We've already seen a bit of this happening just natively, organically, but this is an area that a lot of analysts, a lot of people looking in the space, are saying it's definitely going to increase over the next few years, and we're looking at putting resourcing into how we can make this easier, more efficient, more effective for those who do want to do that, reduce those barriers to entry.

Crypto forex markets. This is another thing that if you ask any analyst in the space, it's very much a matter of time. The fact that these markets can operate 24 7, the fact that these markets can often be quicker and more efficient than centralized systems, but also have access to greater liquidity through the decentralized nature of them, it's, in my opinion, I do strongly agree with this.

It's a matter of time, and we are positioning NZDD to be the New Zealand pair. Yield and lending instruments. Again, there's already limited ways to do this through Aave and a few other DeFi protocols. However, we're seeing that we're expecting that specifically with stablecoins, it's going to grow, it's going to expand up.

And that's kind of in line with those crypto forex markets. Normally, Debt and crypto forex trading do have a really strong correlation with people doing stuff like carry trades or even just wanting to have leveraged trading products. These are very closely related fields. If one grows, the other one tends to grow as well.

Merchant payments and acceptance. So we're already seeing a little bit of this with payment companies, like that's got crypto spend in Australia popping up. We've got PIN in New Zealand. We've got companies like Immersve. We've got a few of the larger card issuers already looking at stablecoin projects, primarily for US dollar ones.

And we're thinking that this is probably going to be The next kind of step, right, because it's the other side of that coin. There is the acquisition of those receiving payments in stablecoins. There is getting your goods and services paid for in stablecoins. But the other side of that coin is then spending it is. Then using that yourselves to acquire goods and services, whether it's a coffee or it's a contractor. This is a big area that we're kind of expecting to kind of complement that other side of that bill payment coin.

Remittances and cross border flows. This touches out that bill payment again. Everything's kind of related here, but it's not quite. They're very distinct areas. But the more localized stablecoins that we see, We're expecting to see quite a strong network effect of the movements between them. Currently, we've seen a decent amount of it actually given that there's really only US stablecoins, but even though there's a situation where there's smaller regional players popping up, the amount of money moving between regional stablecoin and the US funds is actually growing at a really, really incredible rate right now.

We're seeing as Those local regional players mature, we're expecting these trends to grow. Last one, programmable money. If you're in crypto, this makes sense. Programming computers, the way we interact with finance is constantly becoming more and more computerized. It's more and more technique what is it, systems driven. E. g. you don't go into a bank branch anymore, you log on to a web portal, you don't send somebody a cheque, you go through a bill payments portal. We see programmable money specifically as that I want to call it a mental bridge between traditional fiat currencies and digital currencies close, I'm going to see a lot more of the use of programmable money and not necessarily in a way that I think, and this is a personal thought, opinion of mine, but not necessarily in a way that's going to necessarily create new experiences, but ways that are going to make the current experiences that we have more efficient, quicker and essentially just do stuff that we're already doing, but in a better way, e. g. we look at splitting bills, right? Programmable money is a really, really easy and effective way to do that. All right, everyone pays one seventh of, or whatever the ratio happens to be of your bill, and it just automatically happens.

So that's kind of where we're at the moment. It kind of wraps up what we wanted to talk to you guys about today.

00:37:13 Q&A

And I guess over to you, Kev, was there any questions, was there anything you guys wanted to ask us or discuss with the team that built NZDD?

Kevin: Oh, thanks for that, Patrick. Yeah, I've got a few questions. Feel free to throw some questions in the chat if you've got any. Otherwise come off mute in a second my first question, and you and I have talked about this in the past one thing we've been looking at at Callaghan Innovation as well is if we were to get paid in in some form of crypto obviously the first challenge is We would need to pay convert it back straight into fiat to pay our largest expenses, which is always mortgage, rent et cetera, et cetera.

Have you heard of or seen any movement on either the payroll space or the I guess some of these larger payment interest areas like mortgages or rent or anything like that? I think these would be great use cases from our side. If anybody was looking. at building. Obviously mortgage is a massive area to tackle if you're not a bank.

And it's a big area for a bank anyway. But these sorts of topics, I think the payroll mortgage rent, anything you're hearing in this area at all.

Patrick: So that's actually a really interesting question. So this was actually a really interesting thing that we'll kind of. tossing up internally. So Easy Crypto actually, and this is me taking off my NZDD hat and putting on my easy crypto hat is, easy crypto we've had an auto buy feature for a while. And specifically, with NZDD we're looking at creating, we were looking at creating an auto sell feature.

It did get kind of deprioritized, just within our stuff, but it's something that We went through and we did the commercials of it actually makes a lot of sense to do and unfortunately we didn't have at the time the capacity to do this so we kind of see this as a In a matter of time, it's not an if, but it's a when kind of thing, right?

Because I'm, we're really confident that somebody else is going to stumble across this. Somebody else is going to get to the same point where they realize, yeah, this actually just makes commercial sense to facilitate this payment, to facilitate this transfer. And so NZDD, you can already do it one to one. There're no fees other than the network fees, which can be minimized on layer twos. So we're expecting to see this quite shortly. And obviously if no one takes up this opportunity, we're just going to take it ourselves because commercially it makes a lot more sense to do something like this.

Facilitations of fund transfers is normally a pretty good investment to make.

Paul: Yeah, so just generically on payroll, there are providers offshore that are doing that, Kev. For, you know, there's, I'm sure you're aware, there's people who facilitate, you know, global offshoring and, and they are working with stablecoins.

Domestically there's a little bit of interest, but we're in a kind of a chicken and egg phase. They want to know demand, blah, blah, blah. And then in terms of your largest bill payments look, we've, we've talked to banks. There's a certain amount of reluctance. Hey Jerome, nice, nice one. Yeah, there's a certain amount of reluctance to, to to accepting a stablecoin for payment in that regard.

There's one or two that it's not a no, but that would take a lot of ticking and, you know, that's, that's, that's probably a year of effort. So we're working through that. And we also are talking to some local payment service providers, I guess is how I would talk, you know, and so the ability to pay your utility bill and all that sort of stuff is certainly on the roadmap, but it's going to take time as people embrace the technology and get a feel for how it works and stuff like that.

Kevin: No, absolutely. Yeah, it's just, and yeah, it's just obviously, yeah, you're not, you're seeing that tipping point. Right. And it's, it's obvious to me that, you know, for, for, if it's more than 50% of your expenses that can be sort of natively dealt with in this way, it suddenly becomes a lot more compelling than a smaller aspect. Especially in terms of that payroll. Payment, which is, yeah, I guess, hence the question. Any other questions? I'm, I'm just going to keep going otherwise. Feel free to come off mute if you've got any,

otherwise I will fire ahead. I'd really like that scenario before about if you can't get banked and how to pay staff and all those sort of logistics. I wonder if there's almost a straw man we could draw up or walk through. How, how much of a business could you operate today? on stables, if you didn't have a bank account. I mean, maybe it's not a hundred percent, but it could be, could be getting to that point.

Paul: So look, we're, we're trying desperately hard to make that a reality. If you come on to easy crypto and you are trading with the stable coin, there is no fees. There is a network fee element, like where, and where if you have a look at it you know, we're eating quite a lot of the network fees in that regard, just to try and make sure that people feel comfortable when there's no real barrier to adoption.

And then, you know, that, our view is that will open up the door to more adoption care so people can you know, run their businesses, be paid, pay their bills use it as a form of of receipt for their goods, all that sort of stuff. And, you know, those of us in the blockchain world will know that it's eminently more transparent than, you know, Cash, for instance.

So, you know, there's a lot of upside in doing it that way as well.

Kevin: Cool. And I think you just mentioned layer two's Patrick, in terms of starting to, to make those fees even more achievable. Can you talk us through that? Like, I mean, obviously at the moment there's a there's a, there's a fee in terms of each, each transaction, how, how much more do we need to do to get it to those sort of layer two level of, of, of fees, or is that ready now? Like what's, where's that at?

Patrick: Yeah. So obviously the, these are just the rules of the game in the crypto space, but those who contribute, contribute resources to these decentralized networks need to be compensated for the effort, for the capital that they put forward and they express themselves in network fees. That being said. These layer twos, especially ones that can be really, really data efficient stuff like that are using this EK roll of stuff like optimism. They're really, really driving down those costs. So the fact that we're seeing transactions be less than a cent is really, really exciting.

Currently we're offering the product just to a retail base on Ethereum and Matic. That is where the users currently are. And then Matic for those who are that more price sensitive. However, once there's demand, there's really no limit to where we can put this. It's just that trade off about which networks do people want to use because there's their customers, because that's where they need to operate there versus what fees are they willing to kind of pay.

We're definitely seeing that though, like we're moving to a layer two world with all the stuff that's happening in Ethereum with blobs, et cetera, is that we're rapidly, rapidly kind of approaching this point where we're almost chain abstract, where that stuff won't matter as much. So for a user, for an end product point of view, I doubt that in five years, even going to know what chain they're on.

But they're just going to see the product, the end point there. And when we get to that point, network fees are more or less going to not evaporate, but not being nearly as much of a significant factor as we're seeing right now. That's good.

Jeff: I'll go for a sec . Hey, Patrick. Thanks for that. Very, very informative. You have good style. And so my, my question has to do with our friendly local reserve bank. Are you going to be in competition with our upcoming digital cash dollar that they're calling it? Or are you going to position yourself well aside of that? What's your, what's your conversation there?

Paul: That's a fantastic question, Jeff. And, I don't think it's been answered. I, you know, I think the RBNZ has signalled that they're some time away from issuing digital cash.

You know, they're talking about the end of this, this decade. Look, it's my belief that they have Different challenges from what we have. They have to build a product that's gonna serve everybody where we, we've got a product that people opt into. And so I like, I could see them definitely inter operate operating.

I don't know the answer to whether we're gonna compete. You know, again. You know, the one for one basis that digital cash has been talked about in terms of how you exchange it with fiat or how you exchange it with you know, the private money sitting in banks and all that sort of stuff is, is certainly a key tenant of what we're doing.

So I think there'll be complimentary, it would be my best guess, but I don't know. And you know, I think it'll be a very, very interesting space to watch. You're seeing you know, moves in America. there's part of America where they're kind of going, Oh, US Stablecoins are bad throughout the parts of America they're going actually they are supporting the strength of the U S dollar globally and its hegemony, and you know, it's acting a lot more like the Euro dollar. Maybe, maybe we should have a long, hard thinking about this stuff. So look, I just don't know the answer, but it's a fantastic question.

Patrick: The one thing I'd also say with it is, and something that I think at Easy Crypto we try to like keep in the back of my mind a lot, is first and foremost with people operating the space, we're not competitors, we're colleagues, and I think The value that NZDD is going to provide to that is the Reserve Bank can offer a product that we just don't have a chance in hell of offering.

They're the Reserve Bank of New Zealand. They're fundamentally different to a private company, but the value that we can provide to them is demonstrations of how this would work to see what key learnings, to see with a reasonably advanced technical audience, what products, what systems, what networks evolve that they can then take.

And ultimately just provide something that. allows people to use their money better at the end of the day. That I think is the end goal more than anything, more than talking about like share prices or anything like that is actually providing a product that enables people to do business, to trade, to interact financially.

And if NZDD even can provide some key lessons that they take on, then I actually see that as quite a Significant value add to what the project's done. If, at the end of the day, all we have done is made people's lives better, I see that as a win, to be honest.

Kevin: It's also supportive of two of their aspects, which is supporting monetary sovereignty in New Zealand. The other one is it's New Zealand dollar backed rights are denominated. So, I guess, yeah, from that perspective, it's Achieving their goals. And the other one is innovation, right? They're wanting to, to try and encourage that in the space. So and that's what this is.

Jeff: I think they should be knocking on your door and asking to hire you. That's, that's what I think.

Rather than saying, look, this contract is going to be huge. I think it's going to go ahead even It's at some stage, even if even if it doesn't make, uh, they're at least going to build up a prototype.

Jeff: And the contract is going to be massive. And they've been working with Accenture and I would like to see a lot more. Maybe there are, I'd like to see a lot more people in New Zealand put up their hand and say, Hey, come on work with us.

Patrick: As an enthusiast in this space, first and foremost, I think we're, we've made clear that we're very happy to work with them. It's just figuring out what that looks like.

Jeff: I've got another question about big money. What do you do when your when your fiat backed account or when your fiat account gets to a big number, say like 500?

Patrick: We, so we actually have essentially a guiding document with that. Right now we are privileged enough that we don't need to really worry about that until we hit a number. We're not going to reveal what that number is, but we know it explicitly. We've got this agreed upon number. Essentially, if we hit that number, it's suffering from success.

So there's worse problems in the world to have, but we do have a very strong, essentially a treasury policy that has been approved by the government. experts in the space that's actually been drafted by some pretty experienced people that will kind of handle that as a way of essentially reducing risk.

It's not practical, obviously, to hold all of that money in a bank account. At some point you just can't, but okay, well, what cash equivalents can we find? What can we find that operates essentially in a very, very similar way that provides, first of all, We're not looking for super risky investments or anything like that.

The stuff that's really liquid and really stable. And we have definitely some pre lined up options there. We're not expecting to need to use them anytime soon, but it's definitely something we've thought about and we've definitely Without like the way Easy Crypto has to use capital, we've definitely got experience in this space.

We're not overly concerned about that. We'd probably more be celebrating than anything, to be honest.

Kevin: And maybe just riffing off the CBDC discussion as well. Could you maybe talk us through a little bit about the privacy aspects of NZDD? Just, we've got kind of where, where it sits and I guess the, the landscape, it's a hot topic at the moment. Maybe just, just a a short description of it.

Patrick: This was something we actually thought a lot about. It's having cash in with the initial genesis of this product was how can we have cash in your wallet, but on the blockchain, right? And if you've got a hundred bucks in your wallet, unless somebody's robbing you, chances are no one knows about it, right?

Unless you're flashing it, which maybe don't do that. And this was something we kind of talked about is how could we make this more private. It's actually something that we did really, really struggle with because the more private you make an asset, the more difficult it is to bring it to market because of those regulatory concerns.

But also, unfortunately, because there's no, especially for EVMs, there's no centralized single method slash protocol that is for Privacy enhancements. There's kind of a, it's one of those things, right? There's 13 different standards. We need a single stand for all of them. Now there's 14 standards. It was really hard to pick one.

So essentially we went for the base level, which was just an ERC20 token. So, it doesn't have any by default privacy enhancing features. It was built with an interoperable way that, The way you can enhance your privacy on chain through any product is applicable here. So, the privacy protocols, the big one that would shout out is Railgun, doing some really, really cool stuff with some guys based out of Australia.

Would recommend checking it out, it works with that. If you wanna use Multiple segregated addresses, that works too. Whatever strategy that you want to use can work essentially here. It's just, we really struggle to build that into the protocol without trading off some of the really, really key features like working with everyone.

So I know that's a bit of a cop out answer. It's definitely something we're aware of and definitely something we want to do more of. And what we want is a clear privacy kind of protocol winner in the future. We'll definitely look at that more heavily, but right now we just couldn't do that. without making it more difficult to use, if that makes sense.

Kevin: Any thoughts on integrations with things like Shopify Stripe, those sorts? I mean, obviously these are big companies, but is that sort of a thought of eventually being on the roadmap?

Paul: Yes, but it won't be us that does it, Kev, it'll be through partners. Yeah, so we, you know, we, we're A company that does what we do we've got a grants program in place to support companies building off it and you know, we, we want the people on this call to view it as a platform for innovating off. So you know, yeah, so yes, we'd love that, but it won't be us.

Kevin: So an opportunity for others to partner.

Patrick: Maybe on that, like we've had the specifically the Shopify one, we've spoken to people about that. And while we thought that it's probably not, we're probably not the right people to do it. Hence why we want to throw this opportunity out there. We definitely have some, how do I say this? Not experience, but definitely an understanding of what an architecture for that would look like, how a product like that would work. So if there is anyone specifically on the school that is interested in learning a little bit more about that, maybe let's take this online and we can just have a chat about potential options there if it is something of interest.

Kevin: Any other questions? Patent has Shopify integration supports NZDD. That's a good point. And maybe one more from me. I assume that this, this could be a very quick answer. I'm just looking at stablecoins like USDT, USDT that's backed with, Other things like US treasuries and things like that.

I'm assuming at this point, there is no intention on NZDD side to hold anything other than one to one back for.

Patrick: Yeah, so it's 100 percent cash backed at the moment. We're not even looking at term deposits just yet. We really, at the moment, the thing really isn't about like maximizing our returns. The primary currency we're actually trading off isn't New Zealand dollars right now, but it's trust.

And that's people needing to, and believing that if I need the New Zealand dollars for when I need this thing, I can have it, not tomorrow, not in six hours, today. It's really, really important that we maintain really, really high liquidity for this now. So yeah, it's 100 percent cashback and we can move quite quickly on that if anyone needs it. Because yeah, it's just really, really showing that. This is just New Zealand dollars, but digitally, but on the blockchain.

Kevin: All right any other questions? Otherwise Paul and Patrick, where would be the best place for people to find out more? I think you've got a web site in terms of NZDD.

Patrick: NZDD. com. And then if you want to contact us, it's info @ NZDD .Com. Also feel free to reach out to the Easy Crypto team if you want to be put in touch with us directly.

Kevin: Cool. And you mentioned potentially some grants or some opportunities for businesses to pair work together. So if you've got any questions reach out to Patrick and Paul. Otherwise I will just quickly share the. The link through to the slide for the survey, so, yeah, just snap that with your phone and fill out a quick form that will help us orient today's session, but also, well, learn about today's session, but also orient future session, sessions as well. It's only a minute so appreciate all your feedback. Otherwise thank you to the Easy Crypto team and, or, and Patrick and any final comments guys in terms of things or places they can find you?

Paul: All around the crypto ecosystem. So if you see me, come and grab a chat. Thanks very much for having us. And we just want to call out Web3NZ for supporting the industry as well as you're doing. So, you know, thanks very much, Kev and team.

Kevin: Happy to have, have you, and we look forward to doing more of this stuff. So awesome. Right. Thanks everybody. Have a great day. Speak to you all on the next one.