First AMA community call, December 30th, 2020.
The following is a transcription of the first AMA community call between Reserve’s CEO Nevin Freeman and the community on 2020–12–30.
In brief, what we’re up to at the very end of this year, what we’re thinking about just to start us off. As I’ve shared a little bit before, we’re at a stage right now where the initial community that started to use our app in Venezuela and Argentina is going really strong. You can see that a little bit if you look at our Spanish-speaking Twitter account, we just hit 10,000 followers mainly in Venezuela.
A lot of those accounts are from Venezuela. Some are from Argentina and some are from the rest of Latin America, but it’s predominantly Venezuela. That’s totally organic. As you can see from our posts there, we’re really, really active. There’s definitely a marketing effort there to engage people and build that community. We have a lot of followers who haven’t gotten to use the app yet who are still on the waitlist as we’re building the community in advance, but we haven’t purchased any ads for that.
That 10,000 number gives you a good representation of how many people have showed up and are interested in what we’re doing, at least, enough to follow us on social media and engage from time to time. Similarly, we’ve had a pretty good experience so far growing an initial community on TikTok, which has been an interesting adventure. For those of you who haven’t seen it, I encourage you to go check out our Spanish language TikTok.
It’s really engaging and smart. We have I think over 40,000 followers on TikTok, even though we’ve been doing it for less time than Twitter, and that’s helped generate interest in what we’re doing in Venezuela and Latin America as well. At this point, the app itself, as I’ve mentioned, is not fully scalable. What does that mean? That means that some of the processes that are involved technologically and logistically in terms of what our staff has to do behind the scenes to operate the app itself are, basically, just not ready to take on hundreds of thousands or millions of users.
I’ll give a couple examples of what that means. For instance, when someone makes a deposit to their reserve account with say, Venezuelan bolívar, that bank transfer is fielded by a human. Some human somewhere that’s part of our system actually sees that money having been transferred, and clicks a button in our back-end web application in order to credit that user their reserve dollars.
Similarly, if you’re making a withdrawal, there’s also a human process involved in that. We’re in the middle of automating that right now. Actually, this week, we just started testing in production, like actually for live transactions that our users are doing, an automated version of that. We’ve done some automation work with some of the banks that we support and there’s more automation work to be done as well.
It’s also the case that there’s a complicated pricing negotiation that has to happen for those currency conversions because people are trading effectively in and out of US dollars from these other different currencies. When we recently spoke about the reserve exchange that we’re building that’s going to be built into the app, that’s part of making that pricing and an overall process more scalable.
Let me try to say what that means. Effectively, if you’re a liquidity provider who’s helping people cash in or cash out from their reserve app, you’re going to be doing that at some price. There’ll be a cash in price and a cash out price. Right now, we have a very formidable team member who does a bunch of manual negotiations with our liquidity providers with our payment processors, I should say, each morning in order to negotiate those prices.
Then also throughout the day, it’s necessary to update those prices because we’re talking about a volatile currency.
The reserve app already functions as a very basic exchange, but we have imagined a more complicated way, a more intelligent way for that exchange process to work that’s a little bit more like a crypto exchange with something like limit orders and market orders and so on, although it works a little bit differently for various reasons. I won’t go into that now, but we’ve had to think about it a bit from the ground up because it’s not just a copy paste of a normal crypto exchange mechanism. Those are two technological pieces that we have in the works right now, where the bank transaction automation is already further along in development. Like I said, that’s being tested in production as of this week and the exchange mechanism that will automate a bunch of the details about that pricing and the trades that happen when people are cashing in and cashing out, that is in the architecture phase. We’ve explored different options as a team. Me and our CTO have spent significant time on it together and we’ve settled on an overall plan. We’re to the point where now that’s being architected by the technical team and we’ll get into development in January.
I think a big question in a lot of people’s minds is like, “Okay, cool. Well, how soon are we going to see significant growth in the app usage?” Really, it comes down to, “Well, how quickly can we get those pieces in place and a couple of other pieces around scalability?” There are some some things that we’ll end up getting to in a couple of months about upgrading our KYC process to make it easier to get through that so that we can onboard many more users per day than we usually could right now.
Once we get through a number of those steps, it will be in a nice situation where at that point the bottleneck is just, how quickly can we entice people to join? As we mentioned, we have a growing waitlist where we’re keeping our mouth shut about the number but we’re excited about the number of people who’ve signed up on that waitlist. Like I said, we have a lot of interest in these communities, so we are optimistic that this transition from closed beta to allowing people to invite others and try to grow as fast as possible will go well starting over the next couple of months.
Then really the goal for 2021 at this point, it’s pretty exciting for me personally and for the team. We’re getting to the point where the goal really is going to be growth as fast as we can. We feel like we have seen enough to be pretty comfortable that the version of the app that we’ve worked out in terms of its functionality really is something that is quite valuable for a very large population in Venezuela, in particular. We think we can adopt it in Argentina. Although I would say that we’re earlier on in that market in understanding the details, and I think we’re not as confident yet in exactly what needs to be presented to really reach a larger audience.
Of course, with all these statements, we could be wrong. You never really know 100% until you’ve actually gotten the millions of users. We have to look at the evidence that we have and make our judgment calls and we’ve done that and we’ve decided, “Okay, we’re excited about this. We’re going to work on making this scalable. We’re no longer going to be spending most of our time tinkering with and shifting the product and just trying to understand users and iterating,” we feel like we’ve reached a good point where like, “Okay, at this point, we really do want to make it scalable and grow as fast as we can in 2021.”
When it comes to the question of how much can you grow in a year? In startups like this, it’s such a wide range of possibilities. You look at PayPal, as an example. PayPal as an example, in their first few months after launching their initial PayPal product, they ended up on boarding millions of users which was really a fantastic growth story. In that case, it was paid. They had a large monetary incentive for people to join, but that was quite effective and it turned out to be a good move.
You can get those situations where you get millions of people joining relatively quickly. In other cases, you can have slower more organic growth and that can be the right thing to do. At this point, I don’t have a specific goal or a specific projection that I want to put out there, but we’re definitely thinking a lot internally about how to approach growth. Obviously, if we can we want it to be as fast as possible in 2021.
We just have to make sure that we don’t let it get out of hand and grow too fast because that can be damaging to a situation like this. That’s the basic summary.
Can you maybe share a little insight on the arbitrage and what percentages you’d be expecting to earn in RSV?
I’ll start from the beginning for anyone who hasn’t researched this or doesn’t know exactly what we’re talking about here. Arbitrage refers to the process of when RSV is above or below its peg in the more evolved version of our protocol, which we will be launching sometime this year. Users can basically take advantage of that in order to earn money and they can do that in a couple of different ways depending on conditions.
The particular condition that I think Barry is referring to is if RSV is trading above a dollar and if the protocol has captured RSV in essentially revenue and if there’s a pool of RSV that the protocol is holding from those proceeds, then RSR holders can actually go and use their RSR to purchase those RSV. You’d purchase them in expectation for about a dollar worth of RSR that would happen in an auction, but that’s the expected price to settle around a dollar.
Then, you could turn around and sell those RSV for some amount of profit. The idea is, if RSV is trading above a dollar, let’s say it’s trading at a dollar one, then you purchase them for a dollar worth of RSR. You turn around and sell them for a dollar one worth of whatever, could be RSV or well, no. It wouldn’t be RSV. You sell it for some other cryptocurrency on another exchange, where you could sell it for fiat currency on another exchange.
The idea is that that process brings the price of RSV on those secondary markets back down to $1. If everyone is rushing to buy it for a dollar worth of RSR from the protocol and then go and sell it on secondary markets to earn that instant 1% profit, the more that people do that, the more people sell on those other exchanges. As everyone knows that would bring the price down by moving the orders on the books on those other exchanges.
The question that Barry is asking is, okay, if someone is an RSR holder and they participate in that process, then what numbers are we talking about there? What could happen? There’s a further distinction that I want to go ahead and point out which is there are two different ways that you can engage in that process. You can engage in that process of arbitrage by purchasing RSR at the same moment or just before you perform that arbitrage loop.
Or you could be someone who has purchased RSR in advance and held it and then chosen to go and spend the RSR at that time. If you purchase it right then and there, then your cost basis for a dollar worth of RSR is $1. You would buy a dollar worth RSR, you’d exchange it for one RSV and then you go sell the RSV for a dollar one. In that case, you would just profit that one cent.
You just profit from the arbitrage, but you could also have held RSR that you purchased at a lower cost basis. Maybe the dollar worth of RSR, it could be that you had paid 50 cents for that RSR and then when you trade it in, you have the gain that you’ve earned from speculating on the RSR, as well as that one cent of gain that you would get from purchasing RSV and then going and selling it.
Forgive me, Barry, for giving a long answer here. Just that there are some points here that I think are useful to try to clarify and help educate the community about and some of our admins will probably be converting some of this into written AMA material. Hopefully, we can reach a wide audience and have this be a useful explanation. Then there’s the question of okay, well, how often does that arbitrage opportunity present itself for RSR holders in particular?
That’s really a function of, well, how often is there an RSV pool sitting there from the protocol having collected revenue? Then that is dependent on, well, how many RSV are in circulation? It could depend on the velocity of RSV if the protocol is collecting a transfer fee at that time and it also will just generally depend on which revenue mechanisms have been integrated into the protocol and turned on.
There’s roughly three available revenue mechanisms for the reserve protocol. One is for the protocol to essentially earn money just from holding collateral assets. Where the tokenized collateral issuers would pay the protocol a portion of their proceeds in exchange for having a larger slice of that RSV collateral portfolio. For instance, Coinbase and Circle will offer people a certain amount of yield just for purchasing USDC and holding it in an account.
Why do they do that? Well, they do that because they can earn some amount of yield on that money in the bank. They’re willing to split that with consumers or with businesses in exchange to increase the amount of deposits and increase the amount of money that they’re making. In theory, and I believe in practice, that will end up happening on the protocol level as well.
Token issuers like that, I believe will end up being in competition and offering an amount of their revenue to the protocol itself in exchange for having a larger fraction. That’s number one. Number two is a transaction fee. On this topic, there’s really for predicting a transaction fee, I think it really depends on what the crypto market overall settles on, in terms of the fees that people end up paying for stablecoins in the long term.
The way you can think about that is, well, if centralized stablecoin issuers can make enough money just on the yield, then maybe there’ll be enough competition that they won’t charge transaction fees above and beyond gas. If that’s the case, then the reserve token probably also won’t have a transaction fee or won’t have a significant transaction fee because it needs to stay competitive.
If the industry does end up charging fees because of the fact that there isn’t another available revenue mechanism for the centralized token issuers, then the reserve protocol fee will likely mirror that. That’s my prediction and then the third is overcollateralized lending. Similar to what we see in D5. Essentially, you could have a situation where participants could come and borrow the collateral assets from the protocol if they overcollateralize with some other volatile crypto asset that they lock up, similar to compound.
Then there could be an amount of yield generated based on whatever the market rate is for borrowing those collateral assets. Why am I saying this long complicated answer? Well, because the percentage, the amount of RSV revenue that’s available is dependent on all these different variables. I want to try to give people that deeper understanding, instead of just a point estimate which could potentially be wrong.
Practically speaking, in the short term, in 2021, we intended to the Mainnet Launch in 2021, and we intend for these mechanisms to be included in that. That’s when you’d start having the ability to use your RSR in the arbitrage process, but the overall numbers will probably be pretty small at that point. Because we’re talking about likely a total RSV market cap that isn’t super high that’s not going to be in the billions in 2021. It could be pretty small. It could start to get to an impressive number, but it’s still not going to be something enormous. Then also we may or may not have included all those revenue mechanisms at the very beginning because from our perspective, what really matters in terms of the economics of the protocol are the the long-term success, the long-term growth and adoption of RSV.
Then, even like a normal company, even though we’re not a normal company, like a normal company, it makes sense at this point to really focus on making the product work and getting massive adoption, and then start to think more about the monetization of all of it later. I, personally, don’t anticipate that there would be like really significant gains or really significant incentives for RSR arbitrage in 2021. Although we will start to see the mechanism exist and be usable albeit on a smaller scale.
I think that the motivation for people to hold RSR throughout 2021, they’ll get some interaction with this arbitrage process and that will be interesting and educational. I don’t think it’s going to be the case that the amount of like APY is going to be massively competitive with other like yield-farming schemes, where people are giving away huge amounts of their token all in one week or one month of time. Those APYs, I think would be difficult to compete with at this early stage, where we’re not giving away a massive amount of value for no reason.
When will the Mainnet Launch?
Popular question, when will Mainnet launch? I am planning that out. One thing I’ve learned is, if I say or if we say a specific time or even a general guess like a particular quarter, then people will come to have a very strong expectation about it happening exactly at that time and a lot of people will be let down. Unfortunately, I’m not going to give any answer to that. We’re definitely aiming to do it in 2021, and we’re working through the details of what that’s going to look like.
What I will say is that the biggest factor I think that’s going to determine our speed to doing that launch at this point, is our engineering recruiting. We are currently actively recruiting engineers. We have pretty high standards and we are taking our time and being picky.
That being said, we are spending a significant amount of time. I’m personally spending a significant amount of time each week searching for good engineering recruits. We do want to add more capacity and that if we successfully do that, it will speed up the timeline to our Mainnet launch. That’s the the main bottleneck that we’re up against. The reason I say that is because as everyone knows the intention is to do the Mainnet launch at a period, where RSV is starting to get significant adoption and grow significant amounts.
I believe that we’re going to achieve that in 2021. At this point, I’m already planning ahead and working on engineering recruiting and thinking through what that Mainnet launch is going to look like. That’s what I can say about it. Maybe I think it’s likely that we will announce a time frame before it happens, but we’re not quite ready to yet.
Nevin, could you talk a little bit more about PayPal?
Yes, I think I can say a little bit about that. As we’ve said, we’re in communication with PayPal. We are working with them with the aim of getting more significant approval for using PayPal as a liquidity mechanism to allow our users to cash in and cash out via PayPal. We’ve offered PayPal service to our users so far, but that’s been done in a more informal way.
There’s no particular guarantee for that integration being approved, but we think that the odds are pretty good and the timeline that PayPal has represented to us as being plausible is essentially in Q1 of this year. I want to be 100% clear though, that’s not at all the same as PayPal itself adding either of our assets as being available in their app.
That’s a totally separate conversation and we’ve raised the topic with PayPal, but what I can say about that is that they’re not having serious conversations with any cryptocurrency project about that at this point. PayPal isn’t far enough along to have a listing team and to be carefully evaluating additional assets.
They’ve been fully focused on the initial launch of their product and seeing how that goes so far, but I think that it’s plausible that they will end up thinking that way and looking to add more assets in 2021. Obviously, we’re interested in that conversation when the time comes, but that’s not something that they are discussing with any cryptocurrency project as of now.
How’s the app progress on iOS?
Yes. We developed the app with a platform called React Native, which allows you to deploy the same code base for both Android and iOS. However, it takes some additional effort to deploy to the second platform. Really, what it brings the reason why we haven’t done that yet is that then you have to spend more time in an ongoing way like fixing bugs and doing things to adapt everything to the second platform.
We just didn’t want that additional overhead while we were in the mode of really modifying and tweaking and iterating on our initial app. A good portion of users in our target markets are android users and we’ve kept that situation for efficiency. Excuse me, we have already gone through the process to get our developer account with Apple set up. That can sometimes take a long time. We’ve gotten that set up so that we can go ahead and do that deployment whenever we want to.
It’s not like there is an ongoing development process that has to finish before we will be ready to do it. We can choose to do it on relatively short notice when we’re ready and it’s just a strategic decision. We actually haven’t decided exactly when we’re going to do that, but I’m very hungry to do it, of course, and so is the team. It’s just a question of prioritization and making sure that we don’t have too much to handle. That’s something that I anticipate happening relatively early in 2021. I’ll be excited when we can just actually make that announcement, and people can see it, and play with it on an iPhone.
Adding three stablecoins assets to mint RSV can be a little bit tedious for a lot of newbie investors. Is there any plans to create a system where you just add one asset and then the system on the backend will trade it into the stable assets to make it simpler for people to just deposit, say, for example, USDT or say on Ethereum or the wrapped Bitcoin, or something like that?
Yes, it’s something that we’ve talked about. We haven’t prioritized it on the internal development team just because we’ve had other things that we felt were more important for our near-term goals. It’s a cool idea and I think that it will happen. Either we’ll do it or external teams will do it. If reserve gains in popularity the way that I believe it will, then I think that we’ll see a lot of interesting uptake with all of the DAP developers that develop interesting things for D5 protocols.
With RSV listed on curve, that’s a pretty good trading venue that provides liquidity against a bunch of those other Stablecoins. I believe that that DAP could be built today with that existing liquidity pool with that curve infrastructure. It’s just a question of whether someone else builds a slick version of that before we end up prioritizing it or whether we end up doing it ourselves eventually. I don’t know what’s going to happen there, but I think it’s a good idea. I do believe that that will end up happening in the long run probably sometime this year.
How do you define success both in terms of number of users in the next few years as well as RSR market cap?
That’s a good question. I don’t have a particular benchmark for RSR market cap in terms of number of users in our initial target markets of Venezuela and Argentina. Internally on the team, we talked about getting to 10 million users in each country. That’s the the benchmark for, “Okay, we’ve gotten really, really widespread adoption.” That is what I am aiming us to achieve. We certainly have smaller goals in the near term that we want to be focusing on. Right now, basically, we have interim goals that we’re looking at as a team, but that’s if we hit 10 million in Venezuela and/or Argentina. That’s what would cause me to declare, “Okay, we really succeeded in that market.”
Can you talk about how active are Peter Thiel and all the other guys. Are they all in communication with you, how active and helpful are they?
Yes. In recent months, we have not been in particularly close contact with our investors just because we’ve been in an implementation period where — Okay, this is a process that often happens with a startup, so let me just say what’s going on for us and put it into context. Frequently, you raise money and then you have a period where your investors can be helpful primarily, because they’re referring you to other investors or early team members as you do the initial assembly of the project.
That was a pattern that we had with Peter Thiel and Sam Altman and other investors of ours. Once you get to a point where you’ve figured out your industry, and your technology, and your product, you end up being an extreme expert on the particular thing that you’re doing, and it stops making sense to talk to almost anyone, because you figured out this really weird thing that you have to do.
For most people, they wouldn’t even understand why you’re doing it. This is the weird details of our back end operations in Venezuela and so on. You have to spend a lot of time with your head down to make those things work. If that all works and your product really clicks and starts to take off, then it starts to become useful to put your eyes back on the world and do a lot more in terms of thinking about business development and partnerships, and marketing and promotion, and also a lot of hiring to scale your team.
I anticipate that there will be a phase where we’ll be much more dependent on and appreciative of contact with and help from our investors including Peter Thiel, hopefully, this year. I think that that is the phase that it looks like we’re headed into. For the past several months, we’ve been super heads down. Our investors contact us and we answer all their questions. I haven’t even sent out an investor update to our seed investors for many, many months because we’ve just been so focused on what we’re doing.
Will Reserve try to get RSV integrated into DeFi after mainnet?
Maybe. I go back and forth about this. Really, the way I see it, there’s a question of, “What opening is there?” Is there something that we could do that would be really exciting, that would cause really significant uptake and wouldn’t be a year-long slog of us trying to get that benefit? If there’s something where we can deploy a couple of engineers for a month or two in order to execute on a plan that will open doors and then cause a whole big flywheel to start running on its own, then yes. I would be excited about that.
I personally haven’t spotted that. I haven’t seen a thing where, “Okay, this is a thing we could do that would actually change the DeFi game in a meaningful way, that would cause a lot of people to be excited about using RSV, instead of USDC or Tether or DAI, or what have you in the DeFi space,” but my mind remains open to that. The thing is, I think it’s really tempting, because there’s obviously so much activity in DeFi.
There’s so much capital sloshing around, and so it’s like, “Oh, well, maybe we could get a bunch of gains in market cap if we just promoted the thing as being a Stablecoin use in DeFi.” The way I see it, we’ve been making the pretty strong bet that there’s actually this much bigger and much more important market out there that almost no one in crypto has really even started reach which is people who actually need cryptocurrency to live in an important way and who don’t have the infrastructure built for them yet.
That’s really what we’ve been making when building this app and when focusing on people in Venezuela and Argentina who aren’t part of crypto. Actually, if we ignore DeFi, that can be the most advantageous thing for the project, because we’ve gone and understood this whole thing that most crypto projects haven’t really understood and built this whole infrastructure, so we’ll see. We’ll start to see in 2021 if that bet is paying off the way that I believe it will.
Maybe it’ll take until 2022 or 2023 to really fully enjoy the really significant boost that I believe that could cause. That’s why I’ve tried to be as disciplined as possible in not taking on what could balloon into a really resource intensive DeFi angle, but we do remain open-minded to basically providing basic Lego infrastructure if we see a case where we think there would be a lot of uptake where we’re still able to spend the vast majority of our time focusing on the specific play that we’ve decided is the best.
How has the pandemic affected the growth or communication between the reserve team across all the countries?
That’s a good question. We had already started operating as a pretty remote team because of the fact that we had been hiring in Latin America. We had a situation where we had our main office in the Bay Area, in the San Francisco Bay Area. Then we had started to have a bunch of remote employees, so we already started to practice how to work well as a remote team.
Honestly, part of the challenge of that is if you have a bunch of people in an office and then also a bunch of people who are remote, there ends up a divide because the people in the office are able to hang out with each other and do the informal thing you do in-person. The people who are remote constantly feel like they’re left out, they’re not up-to-date. Interestingly, and I didn’t anticipate this, it’s just happenstance, once the pandemic hit, we went fully remote.
We said, “Okay, everyone’s going to work from home,” and because of that, our digital communication methods that almost every team uses, of Slack and Zoom, Discord ended up being the office. That actually makes it so that there really isn’t anyone who’s cut off, because all the communication is actually happening via those virtual mechanisms. It presents an interesting choice for us, of what should we do once all of this winds down and there is the opportunity to have a big office.
Should we do that? Should we try to centralize the team? We have team members in many different countries in Latin America at this point, as well as across the US. Honestly, I don’t know. I tend to think the default is to stay fully remote, because we’ve really learned to do that as a team, and it actually works pretty well, maybe even better than a mix of remote and local.
I really love being in-person with people and the amount of connection you get and what can happen from that. What I think is, if we do stay fully remote, the thing that I’ve been thinking is that it would make sense to get the entire team together for maybe two weeks at a time, maybe twice a year to make sure that they’re getting that human connection, because I think that’s important part of people being able to work together. We’re still thinking about that and figuring that out.
I have a very formidable network that could probably add a lot of strategic value to reserve, and I’m sure some other people listening do too. What can we do to add more value to you and the company with our networks besides just showing on Twitter and hash-tagging RSR?
Yes, I do appreciate the profession on Twitter. I feel like I’ve been really impressed with the amount of that that happens with us not causing any of it. The one thing that I’ll say there which I mentioned previously is that, we do have a bottleneck of engineering recruiting. If you have effective engineers in your network, we’d be interested to, at least, look at their LinkedIn and GitHub, and then maybe schedule a meeting with them.
We can take on engineers right now who are excited about smart contract development on Ethereum, or who are excited about full-stack mobile and web development. Because our current engineers many of them can do both and we can take on engineers who are interested in either in order to speed up our overall progress.
We generally are looking for quite senior people, 10 plus years of experience. We will take on junior people if they’re like really fantastic, but we tend to favor senior people just because more experience means it’s easier to make decisions and do things faster with making less mistakes. We’re open to hiring people anywhere in the world. We favor North America and South America because of time zones, but if we find the right person in Asia or somewhere else, we will definitely consider them.
If you know engineers who you think could be a good fit and who might be interested in what we’re doing, I would really really appreciate referrals. One piece of that is I’m doing an experiment right now which some of you may have seen, which is the reserve referral tracker telegram group. It’s a weird thing. Let me try to explain a little bit about what it is and how it could help our engineering recruiting.
The way that this referral tracking mechanism works is, if somebody refers an engineer that we hire, in this case this is for a web developer position, not our main engineering recruiting, but just a general web developer. If someone refers a developer that we hire, then they get a reward, in this case, I think it’s 50,000 RSR. If you refer someone to the referral tracker and then that person refers a web developer that we hire, then you get half that. You get 25,000 RSR.
If you refer someone and they refer someone else and then that person refers someone that we hire, you still get a half again. You get 12.5K and that goes on forever. Basically, if you are part of the chain of referrals where you brought us someone who brought us someone who brought us an engineer, you’ll get a part of that bounty.
The point of the experiment is to see, can we motivate people in the community who are interested in receiving RSR to basically to search through their network. Not only refer people that they’re directly friends with who could be an engineer, but refer people that they know who are very connected who could refer an engineer because they would still get a part of that compensation if that connection of theirs refers someone to us.
So far, we’ve gotten I think seven referrals for web developers over the past couple of days through this. That’s a little bit promising, but we haven’t seen very many people referring friends of theirs who might refer further. I’m going to see if we can figure out a way to do that.
This simple version on telegram was just because that’s something I could set up in 10 minutes, but we are considering basically recruiting a web developer in order to build a website that does this referral mechanism in a more official way, where you can show up to a website and read about a position, read about how this mechanism works, and then generate a referral link that you can share with your friends. If people click that link to join this process, that’s tracked and you’re part of the chain.
I’m saying all this because this initial experiment that’s meant to bring us a web developer, that’s not meant to grow our generalized engineering team, but that web developer, their first task will be building the website. If that project works out, it could actually be a really useful networking tool and over the next year, could actually significantly accelerate our engineering recruiting, because of a lot of the cost of recruiting is manually searching for the right people. This is something where if we can mobilize the whole reserve community via this incentive mechanism, then maybe that can reduce the amount of time that the core team has to spend searching for people.
If you’re curious if you want to help and you don’t have someone in your network immediately who sounds like they could be one of the top engineers we’re looking for, something you can do that still might contribute to our recruiting process is to go join that referral tracker group and then refer friends of yours who are well connected who might bring us a web developer, and thus kick off that process.
Are you guys concerned about the possibility that larger more established economies could actually go into hyperinflation like the US dollar or like the Euro?
Right. It’s definitely something that we think about a little bit. It’s definitely something that we anticipate happening over the course of time from time to time. I buy into the idea that empires on earth rise and fall. The number one empire rises and falls and you see these cycles that last some number of hundreds of years and that the US is in a period of decline. It may be overtaken and not be the dominant power sometime this century.
If that happens, it is likely that the US dollar will lose its reserve currency status and could have a very painful unwinding and devaluation as people switch away from holding it to holding whatever new currency takes its place. There’s an interesting question like, “Well, how close are we to that kind of situation where the US dollar is actually ceasing to be the reserve currency?
I don’t think that that’s something that we’re necessarily on the precipice for that you would expect to see this year. Although some people think that that could actually be in the process of happening. I personally don’t think so right now. It would be hard to tell. It’d be really hard to tell something like that in advance, but it’s something that could be happening in a decade in two decades and that is part of the purpose of this project.
Part of the purpose of the project is to create a totally state-independent currency that maintains stable purchasing power even through situations like that. It’s something that is a deeper motivation for us, is to end up creating a currency. The way that I think about it, if we were to fully succeed, what we would be offering is a stable cryptocurrency that would stay stable forever, or for the foreseeable future.
What that could mean and this is, obviously, is going out on a limb. We don’t know how these events would play out, but what that could mean is you could actually have the fall of the US dollar from being the reserve currency and people could adopt the reserve RSV as the main currency to transact in, because that would be a period in history where people were seeing oh, wow, even things like the dollar can totally unwind. Maybe there’s a reason to actually adopt something else and use a different system.
That is something we think about in terms of near-term effects from the monetary policy executed within the pandemic on the dollar, the Euro, or the Yen, etc. I don’t personally have any reason to suspect really significant inflation. Maybe that will happen, but it’s not something that we’re currently trying to capitalize on or expecting in a big way. Right now, at this point in the project, we’re still mostly focused on offering virtual access to the US dollar to people who are in countries that have high inflation and capital controls and have trouble getting access to it now, which we think is the right way to get a foothold for this project.
How Reserve targets the next countries, which they’d look to launch their products itself. I previously read, I think China or Nigeria, not China, sorry. Nigeria and Turkey were potentially on your list. Can you talk a bit to that point and also about the general stages which would happen from Reserve sides to actually look to go into these new target countries?
We have our eye on parts of the world that are dealing with high inflation and capital controls are the main indicators. There’s a couple things. One is that we do try not to get ahead of ourselves. We really want to prove and perfect the model in a small enough number of places before we start to spread everywhere. We use the metaphor of what Uber and Lyft did, where it’s like, okay, make it work in San Francisco. Once you have the system working, then try to replicate it in other US cities. Once you have that working and you have your system for replication, then try to replicate in other countries around the world. We’re thinking about it similarly where, for us, Venezuela is our San Francisco, and Argentina is, I don’t know, It’s like our LA or something, wherever they went next. We do try to be cautious.
That being said, we do keep an eye on other places that could be relevant. For instance, yesterday, I had a call with someone from Lebanon, who’s a contact of ours who’s in the crypto industry. We do keep tabs on the situation there, understanding what’s happening with government policy around exchange and what’s happening on the ground and that sort of thing.
The process for starting out in a new country, part of the way that we designed the app was to make that actually relatively simple to do on an experimental basis. We can onboard just a single payment processor in a country in order to open up that currency pair. We can do maybe a tiny social media splash or buy a few ads on Facebook to get a few hundred initial alpha testers and start to see how do people behave in that market. That’s something where we can do a relatively lightweight experiment if we decide to.
What I’ll say is that I think that our, I don’t want to use the word success because we haven’t succeeded yet, but our progress in Venezuela, in particular, I attribute very heavily to having been able to recruit one person who really has a founding mindset, really has a lot of experience, a lot of the relevant connections. I don’t name this person publicly. We keep their identity private and for various reasons.
That person was then able to lead us in that market and also recruit a fantastic team based on existing connections and new people that we’ve been able to find to the point where well over half of our team is Venezuelan. A good portion of those people are in Venezuela really because we found the correct person to lead that part of the project. In my book, that is an essential component of succeeding in a new country that you’re not from, is really finding the appropriate leader for that part of the project.
Honestly, I think that the biggest determining factor that will cause us to say, “Okay, now is the right time to really start in Lebanon,” or in any of these other countries like the ones you referenced, is going to be, “When do we find that person for each place?” That’s something where we are passively looking.
On my call with our Lebanon contact yesterday, I did ask that question again. Who do you know? Do you know anyone who could refer us, etc? We are sniffing around, but you never know when you’re going to bump into the right person. That’s a big factor that will end up determining that timeline.