Stablecoins – freedom money in today’s modern world?

Money is changing. The way we live, work, travel and connect is changing – in fact, it has changed. Yet the world, the Banks and the technology have not caught up with those changes.

When Bitcoin was created, it was born out of the 2008 financial crisis. The world needed a digital currency that was not controlled by central banks and did not care about borders, identity, location or economic status. It was heralded as freedom money.

Since 2009, the digital currency markets have matured and we have seen many thousands of iterations of cryptocurrencies and new forms of financial products – some successful, many not. What is certain, though, is that many of the brightest minds have been working on creating sustainable financial products for this modern world.

Following a global pandemic, our lives have changed in many ways. We’ve seen rocketing rates of inflation, a cost of living crisis, plummeting interest rates and local currencies losing value against the dollar across the globe. Whilst digital currencies alone cannot provide all of the answers, they provide practical tools and infrastructure to make life easier for the many people across the globe who need modern solutions.

Here, we find ourselves in another new landscape and similarly to 2009, digital currencies play an important part in our future. It is time for the next iteration of ‘freedom money’ – but it looks a little different.

At Minke, we believe in both decentralisation and practicality. We are building realistic solutions that take the important aspects of what our decentralised finance ecosystem has created so far, simplifying and building them into a product that works for everyday people across the globe.

How do we do this?

First of all, we listen. The tools we are building need to work for the many use cases we have identified across the wide spectrum of our users. Whilst building a truly global fintech product, our users are our most important source of intel – as we cannot be on the ground in every location.

Here’s some insights from the conversations we’ve had so far. This is an on-going process and will be a cornerstone of how we focus and prioritise our building.

Key User Insights

Those in countries where their local currency is being devalued against the dollar want and need access to stablecoins pegged to the value of the US dollar. 

We have spoken to users in Lebanon, where a Police salary that was once worth circa $2000, continues to be paid in the Lebanese Peso and is now valued at approximately $200 per month. There is an urgent need for easy access to US dollar denominated stablecoins in these countries, to protect the value of users’ income.

For those in countries who don’t face similar devaluation challenges, the cost of living crisis is rife. Anecdotally, these users want to invest small amounts of disposable income and earn rates higher than they can obtain via their bank – without the extreme volatility associated with traditional cryptocurrencies.

In terms of self-custody, users have lost faith in centralised companies and are starting to understand the importance of self-custodying a portion of their assets. One of the key themes identified has been user concerns following the freezing of access to user funds following donations given in support of the Canadian Truckers demonstration. 

None of this is forgetting the many users who simply want a mobile crypto wallet with an intuitive user interface that allows them to interact with DeFi, hold their crypto and NFTs and enjoy the ecosystem.

How important is trust in trustless finance?

One cornerstone of decentralised finance that we must keep close as we build is the trustless nature of the ecosystem. This term and principle allows for debate, both in terms of what it means in a financial system and what levels of trust do users want and need. This is true also for decentralisation itself.

From our conversations (and our experience) we know that many users don’t want to place trust in centralised entities. In decentralised finance, we remove that trust historically given to the humans running the financial system and we place it instead in smart contracts, programmed to perform certain functions that allow financial transactions of all types to take place.

But trust is a cornerstone of what it means to be human. We’re building for humans. The most successful companies and indeed friendships, communities and connections are those built on a foundation of trust. Throughout time, we look to place our trust in those who have demonstrated good practices, morals and integrity and we believe that to build a product that users put their faith into, building this trust has to be at the top of our agenda.

Therefore somewhat ironically, trust is vital in a trustless financial system. 

The first iteration of Minke was our DeFi savings integrations that allowed users to easily deposit directly into savings protocols Aave and mStable. We were asked frequently by venture capital firms and competitors alike why we had not integrated Anchor Protocol, which at the time was offering rates of circa 20% in comparison to Aave’s rate that hovered around 5% at the time. 

The ‘go to’ business model was to place user funds in Anchor earning 20%, offer those users a fixed rate of circa 8% and take the remaining as profit. We were vocal from the beginning that whilst this was indeed a profitable business model for the companies, it was unsustainable, a display of short term thinking and putting profit ahead of consumer outcomes, which is contrary to our reason for existing.

The ensuing fall out following the collapse of UST, Luna, Celsius and more has demonstrated clearly that trust, values, transparency and integrity need to be at the core of our new financial system.

A cross-chain future

Another insight from conversations with our users is that the blockchain of choice varies across countries. Whilst many crypto natives assume that Ethereum is the most widely used, in emerging markets we see high usage of the Binance Smart Chain and Tron, with some users noting that they are moving to Polygon due to the low gas fees and easily usable user interfaces being built. 

This has made it clear that to serve these users, more cross-chain options are needed within the app and therefore that part of our roadmap has been brought forward. 

What is freedom money in today’s world?

It has become clear to me through these conversations that the notion of ‘Bitcoin as freedom money’ is a privileged one. 

Whilst the core values of freedom, decentralization and permissionless finance are extremely important to us – the practical realities of what freedom means to most are very different at this moment in time. Perhaps one day we will see truly decentralized digital currencies succeed in becoming a usable option, but from the many users we have spoken to, there is a real desire for stablecoins pegged to the value of the US dollar. We may well end up in a place where Bitcoin and other digital currencies are our standard unit of account – but a sober analysis would point to US dollar stablecoins being the bridge there.

In the depths of decentralised finance, maximalists yearn for the ability to ‘opt-out’ of traditional finance. I too believe that should be a choice. However, the maximalists are (an important) minority and we are here to take the fundamental philosophies, values and learnings from decentralised finance and build a financial product that best serves the people who most need it.

Another reality we stand by frequently is that of rigid, black and white thinking often detracting from achieving what we originally set out to do. Whilst many will spend hours on Crypto Twitter arguing for causes such as the optimal conditions for true decentralisation, hundreds of thousands of people across the world simply want to protect the value of their money through difficult economic situations.

We’re firm believers that by listening, learning and building for our users, we can build a financial product that incorporates the important aspects of decentralised finance, with the practical solutions and concessions needed to achieve global scale.

So what are we building?

Put simply, we are building a global fintech app for truly modern finance. 

We are focused on letting users onboard fiat currencies into stablecoins easily on their phone, from wherever they may be. From there, they can choose to send, save, exchange or explore all of the new use cases non-custodial finance affords.

We’re increasing our on-ramp options and building off-ramp solutions. We’re currently gas-free on Polygon, which means that users don’t need to hold MATIC to pay gas when using stablecoins – we found that every day users found this a friction point. On other chains you can pay gas with stablecoins.

Minke is self-custodial which means that as a company, we don’t hold your assets – they’re stored on the blockchain. This is one element of decentralized finance that is important to us – your assets should always be your own. 

We understand the importance of trust and whilst we optimise our product so that you don’t ‘need’ to place trust in Minke as a company as we don’t hold your assets, we also place building your trust in our team as a core value. 

Our ‘marketing strategy’ is simply to educate, inform, support and build for our users. While we’re crypto natives at heart, we come from a wide range of backgrounds including traditional finance,  regulatory and conduct risk. In the old world and the new we’ve been working for a decade to optimise for better consumer outcomes – and it’s what we’ll always do at Minke.

Fundamentally, we are here to build a truly modern financial product that delivers better consumer outcomes. Whether you want to protect your income, save at sustainable rates that are higher than your Bank, buy and hold crypto, send money to your family or store your NFTs – we’re building for you. 

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