The Big Whale: Why launch a dollar stablecoin?
Pablo Veyrat: It's a combination of several factors. As soon as we launched in 2021, we already had in mind to be a sort of hub for stablecoins. After developing a euro stablecoin (agEUR now renamed EURA, editor's note), it made sense to offer a version pegged to the dollar (USDA, editor's note).
In 2021, there was also a great deal of uncertainty about the legal aspect of dollar stablecoins. Today, they are almost a given for the US authorities, who seem to have realised that they are very interesting tools for them. Firstly, they allow the dollar to circulate on the blockchain. Secondly, they are major buyers of US Treasury bonds. To ban them would be to deprive ourselves of a major financial windfall.
As Europeans, we often regret that dollar stablecoins are ultra-dominant, is this a way of acknowledging this?
It's true that we found it rather frustrating to go so far technically with the euro in a market where demand is not very strong. For just over three years now, we've been working to build a solid stability mechanism based on the shortcomings of certain decentralised stablecoins that are well established on the market (such as Maker's DAI). Our aim is really to offer high-performance stablecoins, regardless of their currency.
Won't this new stablecoin risk fragmenting the market even further?
Our aim is not to compete with players like Circle's USDC (capitalisation of $33 billion), but rather to complement them. We see Angle Protocol as a kind of 'superconductor' via which users of massively distributed stablecoins (like USDC) could benefit from features that are not offered natively, such as yield, but also move from one blockchain to another at no cost and with attractive borrowing costs. We think we can become a kind of 'Forex' for the crypto ecosystem, i.e. a marketplace where stablecoins are traded.
That is?
The aim is to offer stablecoin trading at low cost by avoiding price slippage or excessive conversion rates as much as possible. With our reserve mechanism, we want to enable our users to exchange dollars and euros at no extra cost. By having a stablecoin euro and dollar, we can meet 99% of market demand.
Such a service could have utility well beyond crypto, i.e. in all traditional euro-dollar conversions.
Yes, we want to be the technical solution that connects the euro to the dollar in the simplest way possible.
How do you intend to convince traditional financial institutions to opt for a decentralised system like Angle?
I think this is a false problem. What traditional financial institutions want is to ensure that a protocol cannot be manipulated by a group of malicious individuals. Angle Labs, the company behind the protocol, no longer has control over the protocol, which is governed by all ANGLE token holders. This ensures that decisions are transparent, because governance is exercised directly on the blockchain, where everything is public.
Personally, I'm not too keen on the word "decentralised". I prefer the word "open finance" to describe decentralised finance (DeFi), in other words an ecosystem where it is possible to innovate easily with more transparency than the traditional financial system. We really believe that blockchain is a more efficient standard for building financial applications, for all the reasons I've already mentioned.
Why then did you choose to develop 'decentralised' stablecoins?
A stablecoin needs to be decentralised when it is designed as a pooling solution, i.e. when its reserve contains a wide variety of assets. This solution, which integrates several players, eliminates many market frictions.
What is the nature of your relationship with the traditional players?
For the moment, we are still largely at the exploratory stage. There are also still major regulatory issues surrounding how banks should interact with DeFi. This is a major obstacle, not to mention the lack of guarantees for them regarding the risks associated with hacks.
The European MiCA regulation comes into force this summer and will force issuers of centralised stablecoins to obtain licences in order to be distributed. Angle should be spared, at least in the short term, because of its decentralised nature. How do you see things unfolding?
The exchange platforms will in a way decide which stablecoins can be widely distributed on the market. We're already starting to see some of them ban certain stablecoins for their European users (OKX banned USDT from Tether in March, ed. note). In my opinion, the big battle will be fought on the exchange platforms.
How will Angle be regulated from this summer?
We clearly intend to benefit from the "DeFi exemption" as a decentralised stablecoin. We are doing everything we can to prove our bona fides to the regulators.
