Today we are joined by Eneko Knorr, one of the most important Business Angels in Spain and recognized for his work on major blockchain projects. This is the transcript taken from the IVOOX podcast, episode 249, which you can listen to here:
Hi Eneko, how are you? How’s it going?
Hi, how are you? Delighted to be here with you.
You’ve now got involved in a new project that is very important internationally, Stabolut. Tell us a little about what Stabolut is.
Well, all of this came about while cooking up ideas with my now partner Julián Beltrán; we’ve been thinking about things to do for a long time, and one fine day he told me he had an idea for building a new stablecoin in a way that hadn’t occurred
to anyone. So he explained what it was about and I said, this is a bombshell, we have to do this. And so I convinced him to get it going and we got down to work, and that’s the idea. That’s where the USB stablecoin comes from, and what it aims to do is carve out
a place in the huge and fast-growing world of stablecoins with a different solution, and at least carve out a place for ourselves in a global market, which is the beautiful thing about this project: really doing something that millions of people can use
all over the world.
Of course, because the good thing is that although Spanish is spoken in the project, the project isn’t really Spanish, it’s international. I say this just in case anyone in Spain thinks you’re Spanish and so on: this project is international and its focus is global.
Yes, that’s right. In the end you have to have global ambition because your audience is completely international, you don’t have
to go country by country, neither Spain nor any other country. You really have to try to compete with the whole world. And that’s what a startup is like in the end, whether crypto, a technology startup or in any sector: one thing is inventing something new, and another, which is usually the biggest challenge for any startup, is making it known.
Sometimes we entrepreneurs have the idea that if something is super good, people will come on their own by word of mouth and it will fly off the shelves, when that’s usually not the case, and you have to do marketing, you have to make what you’re doing known, and then people will use it and stay, they’ll become loyal customers.
But that’s the challenge: getting what we’re about to launch to become known, and having millions of people benefiting from a new kind of stable currency.
The good thing is that USB isn’t born flawed like Tether or USDC; it’s truly DeFi, it’s decentralized and it will offer very interesting new features, right?
Yes, in the end everyone is looking for a solution that’s as decentralized as possible, which right now is impossible and it isn’t, but the goal and the roadmap is to try to make it as decentralized as possible at first and on a path to full decentralization, right? So that it doesn’t depend on anything central; although it’s difficult, it’s on the roadmap.
Above all, what we see in cryptocurrencies is that the best-known and most used stablecoin right now is Tether, it’s by far the largest, it has even withstood massive withdrawals without flinching, so in that sense it’s doing very well, but it’s a bit murky, opaque, and people don’t really know what’s behind it and whether it’s 100% backed or not, and well, the truth is that many people have doubts about putting money there.
Then we have USDC, which is the most regulated, created by an American company, everything super highly regulated, fully backed and fully audited, and in that sense very good, but it has that problem depending on how you look at it: it’s too regulated, too entangled, right? It has also had its problems because it had money deposited, loads of millions of dollars, a little over a billion, at Silicon Valley Bank, and when it seemed Silicon Valley Bank would collapse, it had those stability problems, and in the end we saw the problem that both Tether and USDC have, which is that they keep their money in banks, and in the end that can also lead to some things being restricted for them, right?
If some government tells them, look, I don’t like what you’re doing, and therefore I’m going to freeze your funds or I’ll order the bank to freeze your funds, because I don’t like what you’re doing, or because suddenly, as is happening in the United States with this crackdown, this anti-crypto movement, as the next on the list after Binance’s BUSD and Paxos, which already got a warning along the lines of, hey, you have to stop, and the same could happen to USDC, right?
So these are things that carry that danger and can happen, right? What we’ve done is a cryptocurrency, a stable cryptocurrency based on the dollar, meaning one USB is worth exactly the same as one dollar, but with the advantage that it doesn’t depend on banks. What we do is maintain the PEG to the dollar, meaning it’s worth one dollar, by using derivatives, by using futures. To put it very simply, USB, which stands for US Bitcoin, is a stablecoin backed, curiously, by Bitcoin, even though its value is one dollar.
To create or obtain USB, here’s an example: let’s say Bitcoin is worth 20,000 dollars right now, you send us one Bitcoin and we give you 20,000 USB, so we have a value of 20,000. At that moment what we do is use derivatives exchanges to short that Bitcoin, we open a one-to-one short on that Bitcoin, which means that if Bitcoin rises from 20,000 to 40,000, since we’re in a short position we lose half, and so we have half a Bitcoin, but half a Bitcoin at 40,000 means we still hold 20,000 dollars.
If Bitcoin drops from 20,000 to 10,000, then we’re actually gaining with that short position, so instead of one Bitcoin we have two Bitcoins, but it turns out it has dropped from 20,000 to 10,000, so two Bitcoins at 10,000 means we still hold 20,000 in value with the Bitcoin that was sent to us.
That’s a simple way to explain how this mechanism works, which uses derivatives by shorting Bitcoin, and that’s how we maintain the peg with the dollar.
What do we achieve thanks to this? We don’t depend on banks, there’s no money in banks, nobody can cut us off through the banks, we don’t depend on one closing, on a bank going bankrupt or on nobody lending us anything. On the other hand, we do depend on derivatives exchanges, so what we do is diversify across as many as we can to minimize risks, and then there are a lot of formulas we’re going to use, a lot of formulas that even allow us, while using a derivatives exchange, not to depend on keeping the Bitcoins there, so that even if that exchange closed, we would keep the Bitcoins safe ourselves. This way we have the reliability that the reserves are guaranteed and transparent at all times, because we will constantly publish how many Bitcoins we hold at any given moment, and on the other hand, thanks to this formula we can maintain that peg with a novel formula in which we don’t depend on banks and we use these exchanges to short Bitcoin.
Of course, you have a very strong team of traders, stock market experts; Julián Beltrán is internationally recognized as one of the great traders and market makers in the world, and that’s a key strength.
Yes, Julián. The curious thing is that Julián, back around 2018, was doing all kinds of trading on BitMEX, which was the leader in Bitcoin derivatives at the time, he had all kinds of bots, all kinds of strategies and so on, and that’s where it occurred to him that something like this could be done. Then, until time passed and stablecoins gained such importance, it didn’t occur to him that it was really a viable formula that could be carried out. In the end, he has all this knowledge of all these tools, bots and all the engineering needed to automate a process like this, because when handling a huge volume we would need to distribute everything automatically among exchanges and carry out all the operations automatically without any manual intervention.
So, we were lucky to find a technical co-founder who really knows all the tricks and has wrestled with every exchange in every type of market and every possible situation.
That’s very important, plus the backing of Dextools, which, along with PancakeSwap, is the largest DeFi in the world.
Well, Dextools, curiously, is little known in Spain, since no one is a prophet in their own land. Dextools is a tool for traders on finance exchanges that a huge number of people outside Spain know worldwide, and of course, Dextools right now has one million unique daily visitors, 30 million visits a month to its website of tools for traders.
So this makes it one of the largest tools, one of the most visited crypto websites in the world, with a loyal audience that keeps coming back every day to use those tools to make their trades.
We met the founders and spoke at first with Javi Palomino, whom we met last year at a Block World Tour, and we told him the idea, and they trusted the team and the idea, they saw how good the project is, and the good thing about talking to people who know crypto is that you tell them an idea and they get it right away, they understand what you’re doing, and they ask you the right questions.
When someone asks you the right questions, you know they’ve understood what you were doing, and so we partnered with them, not only for funding, but in the end, the moment we launch USB we’ll have Dextools as a marketing tool, which means tens of millions of visits, and with that we’ll have our stablecoin on display so that thousands and thousands of customers come to us as soon as we launch it.
It’s a very important tool, I use it every time a coin comes out; it’s essential to check Dextools because they already have information on whether it’s legitimate, whether it’s a scam, you get all the information. And having so many millions of users and the possibility of trading or swapping the USB pair for any other token worldwide is like going from zero to a thousand in a second.
Yes, above all because in the end we promote ourselves there and they make us known, and it’s also our target audience. In the end, it’s not like advertising in a newspaper with two million users; these are people who are really using crypto every day, they’re the heavy users, meaning the traders who use Dextools are people who use crypto every day and who are also looking for opportunities, they’re super early adopters and they use all the tools and everything they find from the start.
The truth is we know that audience is going to be key for us, and as I said at the beginning, one thing is inventing the product of the century and another is exposing that product of the century to all the potential customers in the world, which is practically impossible. That’s why, with this alliance, both they and we know the full potential of those users, and that thanks to them public exposure is assured, and that we’ll have the first thousands and thousands of customers who will start using USB.
This exposure will be guaranteed starting this week, which is when you begin the official launch, starting on the 24th with the presentation in Madrid, and then in Andorra you’ll also have a very important international presentation, and then it’s time to get going.
Practically, yes. We’re starting to talk about it here, among people close to us, because in our close community it’s helpful to see the testers. We have to do a great deal of testing now that we’re on testnet, to make sure everything works well, because the idea is that, after passing audits and so on, we think that within a month we can have USB listed on exchanges.
On the internet everyone uses mobile apps, and another important advantage is that we’ll have our own mobile app or wallet, so we’ll have a wallet where people can transfer USB from one part of the world to another at zero cost and very quickly.
This advantage is also important, because we think this is going to be a very powerful international payments and transfers tool, given the billions in fiat currency (dollar, euro, yen, yuan) that are transferred every day between countries, with enormous costs.
This can also be very important, even more so in countries in Africa and especially Asia, which need cheap and fast solutions to transfer money and make payments. That’s also a competitive advantage, the ability to transfer USB quickly and above all with a low FEE (cost), because with Tether, you know, it costs you a dollar no matter what, whatever you do.
Yes, that’s the idea: initially we’re going to make any transfer free.
We’ll be looking at business models, but what we understand is that tens of millions of people should use it; that’s the goal the application, the APP, should ultimately have: that they can store their money, which is the most important thing. In countries where we have, for example, the euro, well, there’s some inflation and we lose purchasing power, but more or less we can trust the euro, and there are countries that don’t have that luck.
So that’s where crypto is super important: in a country where you can’t trust your currency because of the disasters your government is causing, people need alternatives, whether bitcoin or stablecoins like USB, and people being able to safely keep all their savings in a stablecoin is a very, very important thing in third-world countries, in any country, but especially in countries that become monetary disasters, and in the end this is a great social contribution of crypto: helping people escape their disastrous monetary system.
You’re going to bank millions of people through their phones
Yes, that’s the challenge of crypto and we really think we can do our bit. We’re going to bank the third world; there are billions of people who don’t have a bank, because nobody gives them access, nobody allows them to access a bank, and that’s the beautiful thing about crypto: to open a crypto wallet you don’t need to ask anyone’s permission, you just open it and that’s it, with your phone, and the beautiful thing about crypto is that we apply that to our product too.
Anyone can download the app and create their wallet without asking anyone’s permission.
This is very important, more than it might seem at first, because behind the first thing we’re launching, which is a stablecoin, there’s a very complete payments ecosystem, and we aim for millions of people to have our apps installed to make their daily payments and their daily international transfers.
This is very powerful, because in the end what we’re doing is bringing the ease of a Bizum or easy payment systems to crypto, in the simplest way: you open your app, you have your friend’s wallet, you transfer the money and that transfer is recorded. Investing in the stock market, with all the ease of use of current payment apps, would be brought to crypto, and I think there’s an important gap there that we intend to fill.
Then the integrations will come, since surely everyone will want to integrate USB into all those wallets and payment gateways, of which many are emerging, and the other expansion will come from exchanges, both CEX and DeFi, which will be very significant, because once a currency becomes popular, everything comes on its own; you no longer have to ask exchanges to list you, they’ll do it automatically. For example, in fact, right now we’ve already been approached by people offering payment platforms for merchants to start integrating USB.
That’s something that, in the end, as it becomes known, the snowball gets bigger and more people come wanting to integrate, and in the end it’s exponential: the more people know you, the more you grow exponentially.
I hope the Andorra event helps you grow a lot, make good contacts, and that you have enormous success with this
Yes, we’re delighted to be at the Andorra event; what you’ve put together certainly looks very good, and well, from the people I see are going and who are contacting me to meet at the Andorra event, we know there’s going to be a very high level of speakers and attendees, so I’ll be delighted to be with you.
Thank you very much Eneko, see you in Andorra in a few days
Watch the video of the interview on our YouTube channel
