Hi everyone and welcome to another episode of Living on Blockchain. Today we are speaking to Gagan. Gagan is a seasoned product leader with extensive experience across various high-tech companies.
His current work is at Circle which is basically obviously focusing on making global value exchanges frictionless through stable coins and developer products. He has also co-founded AllMinds which aims to provide accessible and high quality mental healthcare. This is an insightful conversation delving a lot into stable coins and USDC about their future milestones, the developer products and general issues plaguing the ecosystem.
I can’t wait for you guys to hear this. Let’s deep dive right in. Hi Gagan, thank you so much for making the time to speak to me today.
How are you doing? Hi Tarusha, doing really good. Thanks for the opportunity. So I’m really glad that we could make the time today.
We are in very different parts of the world and the time zones are very different. But for our listeners, can you tell us a little about yourself and what you’re doing currently, how you got into Web3? Yeah, absolutely. So I am currently, so first hello everyone, I’m calling from San Francisco and I work at Circle.
I lead the developer products team. I’ll describe a little more what that means. So there are two questions there, what I work on now and how I got into Web3, which is an interesting story as well.
So Circle, as many of you know, are issuers of USDC, US dollar coin. It is a one-to-one backed coin with fiat reserves. So you give Circle one US dollar and you receive one USDC in return.
When I say you, I actually mean large institutions are able to get access to USDC directly through their fiat currencies. And the smaller companies, individuals, you experience USDC via OTC desks or via exchanges. It’s primarily used in three purposes.
So either earning yield in DeFi or as crypto collateral for exchanges or for trading, buying and selling Bitcoin and Ethereum. My role at Circle is to actually make USDC useful on as many blockchains as possible and develop the infrastructure that enables Web2 companies to offer not just USDC, but in general, crypto assets to their end users. So some of the products that my team builds are the USDC protocol improvements, URC, CCTP, which is cross-chain transfer protocol that enables USDC to move from one blockchain to another natively.
And then the application stack on top, which is, we termed it as Web3 services. It’s a collection of programmable wallets. So wallet as a service product that enables any Web2 company to embed wallets in their application, smart contract platform that enables tokenization of assets and compliance services on top are as well a part of the product.
So as you can think about it, it’s like a full stack that enables any developer to utilize Web3 or bring Web3 to their users. And then one got me into, yeah, go on. Yeah.
So I was just about to say that, you know, yeah, like obviously I think everybody has heard about Circle and what you guys are doing. It’s an entire suite of tools that, you know, developers can use and we’ve used it. I am pretty sure that our listeners must have utilized your services or your products in one part or the other without really knowing who is behind those products.
And this is a wonderful way for them to perhaps understand who is actually building these wonderful tools. Yeah. Yeah, that’s true.
Can you tell us about your journey? Yeah. Yeah, absolutely. So I was working like, so for background, I am an engineer by background.
I’ve coded since I was in high school, a software programmer. I started my career working in, you know, in the internals of Android phones at Qualcomm and then wanted to, you know, build more fast developing software. So I went and built UI for Amazon Fire TV and Amazon Music.
And I always wanted to build a product and a company. So I was dabbling on the side with new technologies and I came across Twilio and this is, we are talking in 2015. And my experience at Twilio was actually foundational to why I thought about Web3 and crypto, which I’ll get to in a second.
So basically for people who do not know Twilio, anytime you are calling or messaging your Uber driver, you’re likely using Twilio in the background. So Twilio provides APIs for developers to embed communication, yeah, voice and SMS in their applications, right? So working at Twilio was like a remarkable experience. It was, I was there when the company was 250-ish people.
And by the time I left, we were 3,000 people. And many of the companies I saw that at the time, they were building like really cool, innovative products, like all the way from a demo I saw detecting Parkinson’s from a phone call based on voice analysis or marketplace and ride sharing companies like Uber, TaskRabbit, NIF, you guys are familiar with those. And two-factor authentication.
So when you’re entering your password and you get an SMS to validate that you are the right person who actually entered the password on your phone number. So that’s, again, all these kinds of use cases got enabled with Twilio. And something absolutely out there I saw a use case where a Coca-Cola vending machine would send an SMS to the contact center for a dispatch when it runs out of Coke.
So what struck me was that telecommunications had been a completely offline concept where SMS and voice was a part of the, is highly regulated. It is geo-bound. So for in India, if you have Airtel or Reliance or BSNL, these are not the carriers that are operating internationally.
Similarly, in the US we have Verizon, T-Mobile. And so a lot of the carriers are generally bound to the geos that they operate in, and people pay a lot for international connectivity. So interconnect fees are really high.
I grew up in an era where when you had to make an international phone call, you had to stand at an STD, ISV, PCO booth. And from there you would be watching a ticker paying a lot of money as you are spending time on the call. In some ways, I feel the experience with money is very similar.
Because banks are generally geo-bound. They’re bound by the boundaries they operate in and the boundaries that are set by the government of local countries and local jurisdictions. But I, of course, did not know this when I was at Twilio.
But my experience at Twilio was really fun. I enjoyed building for developers, and I enjoyed watching what happens when you connect an analog asset, or which is something which is a construct that is completely off the internet, connected to the web, and suddenly new use cases start emerging, many industries change. Well, at that time I was still naive.
So I went on, I was like, I wanted to do more consumer products, which is always fun to be able to tell your friends and family what you’re working on. So I went on and did, anytime, again, like you’re calling and messaging your Uber driver, that’s what I was working on at Uber, and then build Ray-Ban stories, smart glasses at Facebook. And then after five years in consumer product, that’s when I was revisiting my career and thinking about where I want, what I want to do next.
I have studied blockchains and Bitcoin and Ethereum for a while, but I had never thought that I would go work in fintech or in crypto. It was something out of curiosity as a technologist, although of course, aware of, I dabbled in it a bit. And then when I was thinking about money and what could be as big as communications, I wanted to work with developers.
I wanted to go back and work in a disruptive space. And the spaces I was thinking of were actually either fintech or in AI. I had done some of the work in AI when I was working on Ray-Ban stories at Meta, but what fascinated me about Circle and crypto at the time, and this was my formal entry into Web3 and Circle about two and a half years ago, is this same notion that money is an analog or has been largely an analog construct that infrastructure is so dated, it is 30, 40, 50 years old and that is still in use.
And what if money was completely native on the internet? How could you bring an analog construct of money with all its properties onto the internet and make a new internet financial system? So that concept fascinated me. And then I heard Jeremy on his podcast, he’s the founder of Circle on money movement. I heard him talk about programmable money.
And what struck me about Circle was it was something very similar to what Twilio was doing. So Twilio had connected all the carriers on the backend, which were geo-bound and then created this concept of programmable voice and programmable SMS. And so it enabled communication to happen natively on the internet and just use the telcos for connectivity.
To me, it’s usually seen something very similar. It’s like Circle is connecting all the banks or numerous banks around the world so that people can on-ramp into crypto via USDC and get access to digital money through the fiat currencies they are in 24-7. And once they have USDC, that money can actually move around natively on the internet using blockchains.
So at that point, a user across different countries, it doesn’t matter which country as long as you’re connected to the internet, you have access to digital money. And that concept is super powerful. So when I analyzed the company, I felt like the company had done the great work of creating USDC, but a lot of developer infrastructure that is needed to make it widely available and useful was still not there yet.
So my pitch to Jeremy was to let me come and build that. And so that’s what I’m doing at Circle. This is absolutely wonderful.
It’s quite a beautiful journey in the sense that your motives are very aligned with what Circle is building. It’s very rare that you come across somebody who gets into a space with certain intentions, with certain ideas in mind, and they kind of find a project that perfectly fits their vision, which is from what my understanding is, which is what happened to you. Yeah, that’s something which I’ve been very fortunate with, and I do not take that lightly.
It happened after many years of working, so I’m grateful for that fit, because it’s been a really fun journey working in Web3, the ups and downs with a fantastic team. And so it’s been very rewarding. Right.
No, I’m sure that it is very, very rewarding. You’ve kind of worked with Meta, and you mentioned earlier already Uber and Amazon, and you mentioned Qualcomm etc. as well.
How was working at these companies, how has that kind of added to your vision and your approach to perhaps product development and leadership and what you’re doing here in your journey? What were the kind of takeaways that you had that you bring to the table here? Kind of touched upon it already, but I would love to understand a little more, because you came from all of this experience, and now you’re building here. Are there any takeaways from there that are helping you here in Web3 as well? Because these were primarily Web2 companies. Yeah, absolutely.
That’s a great question, actually. So it’s something I think of often, as over the last 10 years, the work over the last 10 years, especially starting from Amazon, there are values that I have absorbed from each of the companies I have worked at and have admired. And there are things that are also, of course, not everything is always rosy.
So there are things that I have dropped along the way and learned what not to do, which is equally important. So for instance, one of the core values that I operate with is a no-excuses mindset, a radical ownership mindset. And that is something I saw in practice at Amazon, where you are an owner regardless of what you work on.
I was working as an engineer, a junior engineer at Amazon. And even then, I felt so empowered. Things are in my control, and I can affect change.
And so that’s the number one principle to operate with is no excuses. It’s high ownership. I feel the agency to affect change, even if the work is not in my function.
So if I’m working on a product team and there is something blocked on an engineering team or marketing team or legal team, I make it like the success of the product is my problem. So I’m going to go help the different teams solve whatever they’re blocked on. And that is something that I felt in different companies, cultures vary.
And in some companies, it’s easy to, or it’s not easy, but people tend to limit their role to what they believe their function is. But product inherently is a cross-functional role. And a no-excuses mindset is a really important product function to succeed.
So that’s the number one thing, which I operated with right from Amazon and operated throughout my career, and I sustained it. Actually, what I learned was something which the power of builders and developers and celebrating our customers really well, because I felt like that’s the fun thing in building for developers. People are investing their blood, sweat and tears into building a product.
They’re investing their precious time and you’ve got to help them succeed. And unless you operate with the utmost sincerity towards your customers, and if you watch them succeed and grow, it’s very rewarding. So I think building for developers, keeping a humble mind, and there was a value of failure, which I really admired.
It was called no shenanigans. So no shenanigans is basically no gimmicks. No, you always operate to add value.
You don’t create any, don’t fake value, actually deliver value. So a no shenanigans mindset is like a second value that I really admired. I’ll speak of two more over the years and you can ask me more about it.
So the two others are, one is draw the owl. Draw the owl means it’s a fun name on the internet. If you want to draw an owl, just say, hey, Google, help me draw an owl.
And it’ll tell you, draw a circle. Step two, draw a bigger circle. Step three, draw an owl, which means that there is no one way to do things and you have to find your own creative ways to solve problems.
And so that is again, like an empowering mindset where there is no cookie cutter solution. In Web3, especially this is true because many parts of the space haven’t found product market fit. So what is the answer? We can’t look for answers externally.
We have to find answers. We have to operate from first principles and there are no cookie cutter answers. So that mindset helps a lot.
And that’s something like I’ve retained over the years. And then a lot of management lessons I learned were from Facebook and hustle I learned was from Uber. So management lessons, like Facebook operates with urgency or like the size of the company, the size of the company it is, it can literally pivot on a dime.
And we have seen like Zuckerberg do that over and over again. And it’s incredible to watch. It’s also created a very high performance culture, really principled performance management.
So those management lessons I absorbed a lot from Facebook. And so all of this, the amalgamation of this high ownership mindset and no excuses mindset, creativity and management is what I try to work with at Circle as well. And what I really enjoyed working on with Circle is the Circle has this mindfulness as a core value, which encourages deep listening, which encourages standing in someone else’s shoes and understanding their perspective.
So it really feels like a complete structure right now, both in like how I operate and the urgency with which I need to operate. Because again, things move so fast. One very important factor in Web3, why these principles really matter is because Web3 is very noisy, right? Like we have, there’s a hype train always going on.
There’s always this next token, always this next use case. And there’s always so much infrastructure being built. So it gets hard to figure out what is something that is lasting, what is true, and what is a trend that will fade.
And I come across a lot of activity in the space where, which sounds like trends. And so it’s really important to think from first principles and stay focused on delivering value and notion elegance. And only then it can be like lasting companies or lasting products over a period of time.
So Web3, I think like actually operating with such values helps a lot in Web3. I would completely concur with that. I think what you just said, you know, these are very universal values that will help whether you’re building in Web2 or Web3.
And having, you know, having been imbibing those perhaps the values from the kind of experience I would imagine that, you know, your journey has been really wonderful. You mentioned mindfulness is something, sorry, as something that, you know, you’ve kind of also imbibed from Circle. And that kind of brings me to the other venture that, you know, you’re associated with Allminds.
Can you tell us a little about that? Because I do believe that that is to do with mental health. Yeah. Allminds is a public benefit corporation.
It is a company that a friend of mine and I co-founded in 2019. And it was encouraged by some of the patterns we were seeing, like our own personal experiences and with our friends and family trying to get access to therapists. And there was a stigma associated with mental health.
There’s also like we found that it was very expensive to get mental health care, especially in the US. And it wasn’t like commonly understood what the benefits of getting mental health care are, who should get it, when do they get it, whom should they get it from. And when we saw my friend and classmate from Berkeley, Juan, him and me, we had a similar experience.
We had tried to build a company in the past. It’s a problem that really deeply resonated with us. And over a period of the last four years, both of us have built this mental health care practice, which is a combination of Park Clinic and Park Technology, or you can think of it as a technology power clinic with the mission to enable access to affordable but high quality mental health care for everyone, or democratize access to high quality mental health care.
So the way we do it is like we, step by step, we have built our own software stack for clinicians, who are our own partners and employees of the clinic. And the clinic is run by a wonderful woman and our partner, her name is Tangia. She has operating experience of clinic for over 20 years.
And so our main value that we deliver is we enable people with insurance to get access to therapists within 24 hours. And they do not have to pay the full cost out of pocket because they get reimbursed by insurance. And so we are licensed with, we have licensed clinicians working with insurance companies.
And we get patients of all kinds of severities, mild to high severity, and we do behavioral healthcare. And we have about, we have a north of 150 therapists who are working with us right now. And that’s something which we continue to run.
Yeah, it’s wonderful. I think, you know, mental health and just throwing light on it, making it more prominent, as you said, that there’s a stigma associated with it all over the world, I believe, and just getting it out of the shadows and providing support, which is very necessary, is important. And especially, like you mentioned, in USA, it can be quite expensive to opt for such therapies.
You guys are doing a wonderful job in catering to that particular, you know, segment of audience. What is the kind of traction that you’ve seen on the platform so far? If we are a small, but mighty small or profitable company, I will not disclose the numbers publicly. But you can imagine that we, like I said, no shenanigans approach, right? So we do not advertise.
We have a solid and growing team. And we, yeah, yeah. And we are like, we are heads down.
We have not raised much funding externally, we haven’t needed to. So it’s a bootstrap company. The Berkeley House Fund is the only fund we got like an accelerator around, you can think of it like a YC initially to, you know, help us because both of us are outsiders to healthcare, and we were passionate about the space.
So it helped us understand and how to work with insurance companies and get our clinic set up. But beyond that, we have not raised funding and we are, yeah, we are knock on wood on the path to achieving our mission, fulfilling our mission. It’s not just ours, but there are many other companies, larger and smaller in the space who have similar aspirations.
I think there is a lot of need growing need for mental health care. And it’s something that we feel, you know, we approach in a very humble and sincere manner to do our part to make it easy for people. So yeah, we are solid, but I would not talk about the numbers here.
Yeah, that is that is a perfectly fine, but who knows what you guys are doing there. Now, you’re coming back to Circle and talking about stablecoins in general, like, if you zoom out a little bit, can you tell us a little about the role of stablecoins in the future of the global financial systems? Yeah, so the role of stablecoins, the way I think about stablecoins is, or, you know, if we think about money in general, so money has three functions. It’s a unit of account, a store of value and a medium of exchange.
And we have, you know, we have a good framework to think about money. So the unit of account being that you should be able to price something in it, store of value, as in it should, your savings should not deteriorate, they should grow over time, and you should feel comfortable keeping your money, keeping your savings in the denomination or in the form of money that you feel secure with. And then medium of exchange is basically like, you know, trading, buying and selling goods.
So USDC is fulfilling all these three tasks today, or stablecoins in general are fulfilling all these three tasks. Stablecoins have found product market fit as internet money in crypto assets. So what I mean by that is, in high inflation countries, people are using stablecoins to hedge against inflation.
So they are able to get access to crypto dollars and get some yield from an Aave or from a compound pool, and they can get like 3%, 4%, 5% yield. And so that’s working USDC or stablecoins working as, you know, a savings, dollar savings account or a store of value. And then you’re buying and selling your digital assets all day long, NFTs, Bitcoin, Ethereum, any meme coins using USDC and USDT.
That’s medium of exchange. And a lot of these digital assets are priced in USDC. So you go and you see BTC, USDC pairs or BTC, USDT pairs or stablecoin basically are being used to price these assets.
So we simply have found like product market fit as internet money. Now the question is, what else can they do? And to me, if we think about the market size, it’s massive. It’s like there’s $100 trillion of money on the internet.
And there’s about $3 trillion of payments related activity that happens on the internet. And at any given point, I think there is another, there’s a number on like in the order of no single legit trillions that is stuck waiting for settlement on the internet. A very interesting example is a sovereign wealth fund, a company that works with a sovereign wealth fund on shipping jet fuel to US, UK and Netherlands.
This company has to spend a million plus dollars per week waiting for the payments to settle in their account before they can dispatch jet fuel. Now, similar to that, so for settling, basically like to simplify it, whenever you are sending money from across borders, there’s usually a T plus two is like 24, it’s 48 hours plus settlement time in most cases. That means like the receiver will receive money in their account in like about 48 hours.
And stablecoins do not have this problem, right? Like just like how on WhatsApp, instantly you can receive messages on the internet with stablecoins and crypto wallets, you receive value instantly on the real time. So to me like stablecoins have enormous utility and growing utility in cross-border trade to settle payments. It has enormous utility in cross-border remittance.
When you’re trying to send money to friends and family, you should be able to do it, you should be able to do it like you communicate with them. When you’re trying to save in countries like, there are numerous like South American countries and Middle Eastern countries where there is high inflation. And there we see an organic demand for stablecoins to be utilized as a form of savings.
So whatever stablecoins have accomplished as or have proven to operate as money in the crypto native assets, I think the utility of stablecoins is much bigger and broader for all forms of money on the internet. Right. Yeah, you’re absolutely right.
I think stablecoins have found a great PMF, but this kind of leads me to two questions. First, I’ll go with the challenges. So what are the kind of challenges that your team has faced so far in establishing a stablecoin and just promoting other blockchain-based products that you guys are building? Yeah, that’s a good question.
And thank you for asking that because from an outsider point of view, when I meet a lot of people, especially at conferences, people think, oh, you know, stablecoins is such a great and easy business to operate. It’s easy money. No, it’s absolutely not.
It’s really hard to do stablecoins the right way. And I’ll describe and especially like that is where I give a lot of props to Circle for the amount of energy and effort it spends and ensuring that it is complying with all the regulations around the world, not just in the US, around the world to make sure that stablecoins can be operated as internet money. So for instance, USDC and EURC are the only major stablecoins that are MECA compliant because the framework in Europe for crypto assets and for stablecoins, it basically legally approves USDC to operate as internet money in all of EU, which is a really hard thing to do and achieve.
And then creating like banking partnerships around the world with the top, they’re called globally systemic important banks, GSIBs, is a really difficult thing to do because crypto is inherently risky and banks have a low risk appetite, right? But you need on-ramps and off-ramps around the world in order for people to experience digital assets. So a lot of the work that Circle has done and continues to do is on the financial infrastructure and on the legal and regulatory side, which I think is not just good for Circle, but good for the whole crypto ecosystem. Like I think like probably USDC is the largest clean on and off ramp into crypto.
And that’s a very important function for the whole industry. Now, I think the challenges that I see and we experience and actually invite everyone to as a whole industry for the crypto community, the builder community, everyone needs to solve these challenges together. And this is where I invite partnerships all over the world is there are three challenges that prevent us today, prevent the whole industry from growing.
Number one is blockchain scalability. So we have seen use cases, and these are on our website, you can go and see the case studies on these. There are large companies who have hundreds of millions of users who are experimenting with blockchains.
They want to actually develop various use cases. Example is Grab in Singapore, trying to distribute purpose-bound money for Singapore’s Project Orchid related coupons to users. Now, Grab has 200 million users.
Which blockchain today scales for that volume? I think there are, despite all the claims, and we see that there are inherent performance issues in blockchains where block space is limited and enterprise wants reliable, robust infrastructure at very low cost. You cannot imagine like, oh, you know, if there is a spike on AWS, your transactions or your data rights will start failing and your costs will spike through the roof exponentially, right, like that doesn’t, there is no concept of a gas price on AWS. So similar to that, if you’re thinking of that 3S infrastructure for the internet, then we have to solve scalability problems.
That’s number one. The second bucket of challenges is in UX. Now, again, because blockchains don’t scale, any application that finds any kind of success wants to offer reliable performance, and so it ends up creating, any application developer, they end up creating their own blockchain.
So you can see there are 1,000 plus L2s and AppChains that are live today, and this is not slowing down, it’s continuing. Now, the poor user who has to use numerous applications, now they have to do all the asset management across different blockchains. So there is like massive UX fragmentation.
Now, if you think about like, if I ask you, Tarusha, how many apps do you have on your phone? I’m sure you have like 50 plus applications. If each of these 50 applications has its own blockchain with its own native assets, or your assets are distributed across all these, and you cannot use your money from an Uber account into an Amazon account, or vice versa, because they are on different chains, that creates such a terrible UX. So how do you expect users to be able to utilize the power of this beautiful technology that exists and the UX problems or defragmenting UX and liquidity is like problem number two to solve.
And then lastly, it’s regulatory and compliance hurdles. We have to educate and we have to partner with different governments around the world to help them understand why this technology is beneficial for everyone. I think there is like the ethos in the purest sense, there is this, sometimes there is this sentiment on like the government is against us, but no, the government is just trying to protect people in most cases.
So the industry will not succeed, no industry has succeeded in the face of like the, without at least helping the regulations evolve to adapt to the technologies that we are being built. You see all the way for AI, you see Sam Altman sitting in White House trying to explain to regulators how will AI work, or you see like Uber, Travis Tallon, they did this and others educating like why the taxi related laws or transportation laws around the world are dated and they need to be updated. So companies can affect change, industries can affect the regulations, but it happens with like there’s a balance between a groundswell of adoption and then education.
And I think like that cannot be underestimated. So these are like the three, regulatory and compliance, UX and scalability are the three top of my challenges. Right, I think scalability, UX and regulation, the kind of, those are the main challenges that any entrepreneur also faces they’re building in Web3.
Now, coming to the other question that I had when you’re talking about stable coins, there is always a little chatter about, centralized stable coins as well as, versus decentralized stable coins or decentralization in stable coins to just improve the ecosystem further. What is your take on that particular chain of thought that decentralized stable coins are a better bet as against a centralized stable coin? Yeah, there is, so it’s decentralization for the sake of decentralization is, it’ll always stay niche is my thought. So let’s like break this down a little bit, right? Like you could think about like USDC, if you think it’s operated from Circle and Circle is a centralized company, sure.
But then USDC enables so much of DeFi activity, right? Like there is a majority of the use case of USDC is DeFi, is decentralized finance. And so all the exchanges, all the DEXs, they have their USDC pools, they have trading pairs in USDC and so on. So in order to enable decentralized activity, Circle adopts a regulated centralized approach so that DeFi continues to thrive.
Now, in a purist sense, you could say that, oh, you know what, Dai as an example is a decentralized stable coin because its governance is fully decentralized. Sure, a lot of it was collateralized until recently by USDC. And if it is not collateralized by USDC and it’s directly collateralized by US treasuries, US treasuries are issued by the Fed, which is a centralized government.
So it is the ethos of decentralization where you have a decentralized set of validators who are enabling the transactions to be written and no one centralized activity from an infrastructure standpoint can bring down the system. That is something which is important. But decentralization also has a coordination cost associated with it.
Because by definition, if something is decentralized, you are gonna wait for consensus, which means there is scalability problems, which means there is UX problems that originate from it. So to me, there’s always a practical balance of how much decentralization is good enough. As long as we can, I’m a product guy, as long as we can abstract the complexities associated with decentralization from UX, from scalability, I’m all for it.
But I think we as a community can decide whether there will be, there is no right answer. There will be some products which will always be decentralized and their value will be limited to what the value props they offer. For instance, if Bitcoin is completely decentralized, it is great, it’s going to work great as a store of value, but it will not work as a good medium of exchange.
You cannot think about your grandmom utilizing Bitcoin 0.00008 Bitcoin to buy vegetables. That just does not happen. It’s not a good user experience.
The transactions don’t settle with Bitcoin fast enough. So you cannot use it for consumer payments. There you need something which is, where pure decentralization breaks both scalability and UX.
And then you have stable coins where there is a reserve management component, which is to protect people. And so that reserve management cannot be decentralized or if it is decentralized, again, there is coordination costs. So you will not get one-to-one redemption instantly, 24 seven around the world, if you like decentralize like financial governance fully.
So that is something which again, it’s a property. It’s a feature, it’s not a bug. Centralization is a feature in some cases, it’s not a bug is my point because it delivers tangible user benefits.
Right, yeah, I think, I have to agree with you there, that what you kind of started with, that decentralization should be avoided. And at times some things are better left being centralized, like you said, and there is no right answer here. I think people make their own informed choices and they kind of move forward.
But it’s good to see that, stable coins have really been able to penetrate the market so far and they’ve done so really well. Do you feel that you get a lot of resistance from say traditional financial entities, when you’re talking about your product or when they see the kind of impact that you guys have made? I’m thinking about it. Like, no, we have partners across the board who range from skeptical to curious to enlightened and they want to participate in this thriving ecosystem, in the thriving Web3 ecosystem.
So we haven’t faced like, when you say resistance, we haven’t faced that, oh, you are this scenario, at least since the time I have been here, that, oh, you are Circle or you’re working in crypto, so we do not want to work with you. I think most like Web2 companies, the traditional players, they are generally just waiting for regulations to evolve because they have, these non-crypto businesses, they are like, they have a lot to lose if they take missteps, right? Like financial regulations are not to be underestimated. And it’s interesting, like I come across a lot of developers as well.
And we work with developers from all fields, ranging from like consumer brands to infrastructure developers to building financial applications. And this includes, by the way, like me, when I joined Circle, I think like the understanding of just implications of moving money without licensing or without understanding the sanctions laws or why does KYC or AML exist? I think a one-on-one of this is really helpful when you’re working with financial products because the implications of not doing it right are, it’s like you can get started, but the minute you grow big, you will be in a little bit of trouble. So the larger Web2 companies or the traditional companies who are large businesses, they know about their compliance teams, their legal teams, they know about what the gray area is, they know that the regulations around, their regulatory clarity hasn’t emerged in many countries yet.
So that’s where they are either skeptical or curious. And they’re curious because they want to understand how is a large business operating in crypto and educate us and let us know what can we do here. And they always start small.
But like my instinct is like the minute the regulations become clear, a lot of these players are gonna start jumping in. And you already see that happening with like BlackRock creating the middle tokenized treasury. And you have like ETFs that are again, driven a lot by the traditional players.
So they are stepping into Bitcoin and Ethereum ETFs. And that’s their like, they’re testing waters, they’re offering these assets, digital assets as part of like traditional investment portfolios. And you’ll see them like building more and more.
Like inherently the advantage that I think of for a traditional player is like it expands the demand side of their products, right? Like for instance, not every user in Thailand, in India, in any other part of the world does not have very easy access to tokenized treasuries. But today they can get access on the blockchain to Biddle or not every user, but like accredited users can get access to Biddle or they can get access to USDC or USDP or numerous stable coins. So in some form or fashion, they are getting access to a stable federal reserve currency that otherwise they wouldn’t have access to.
And that’s like a massive expansion of the demand footprint, right? So you have everyone connected to the internet and it suddenly becomes your customer or has a potential to become your customer if you’re a traditional institution. So I think that opportunity is not lost on the sophisticated players. It’s just they need more clarity on the regulatory side.
They need to see that the technology and the concept of skills. Right, you kind of put it in a wonderful manner. Can I completely confess? I think just envisioning what you’ve said is leaving me at a loss for words, but I would love to know what is the next big milestone for Circle? What is the next big dragon that you guys wish to tame perhaps? The next big milestone for us? Yeah.
Let’s see. We have a bunch of exciting products in the pipeline, but we are working on improving UX through some chain abstraction. We are working on a faster way to move USDC across blockchain.
So like a faster form of cross-chain transfer protocol. We are big believers in account abstraction and what it enables. We are working on scaling up account abstraction more and more.
So there are numerous products that are along these lines of solving like scalability and UX challenges or fragmentation challenges that I’m actually really optimistic about that in the next one year or so, we can get to a point where we have good enough UX for people to be able to use their assets across chain. That’s wonderful. So that’s the, you know, you are really focusing on the interoperability aspect.
Would that be correct? Yeah. It’s like access to, the way I would think about it is like access to USDC 24 seven regardless of whichever fiat currency you hold. That is like probably one line of thinking which is really important for us to, you know, keep on boarding more and more users.
How quickly and easily can you get access to USDC? So that’s one. The second is the, when you say interoperability, it’s more interoperability again, is it’s a way to solve fragmentation. So I think about products that will solve scalability and issues and fragmentation of UX and liquidity.
So that is where like cross-chain transfer protocol, account abstraction, like Game Masters and in our program with Wallet Slayer so enabling like plugins. These are some of the things that we believe will help with that. So that’s something in the second, you know, like bucket of things that I’m really excited about that we’re going to launch over the next few, like iterations of these are all by the way, products that are already in the market being used broadly, but the next iteration of these products, I think it keeps getting better.
So I’m really excited about the improvements that we are about to ship. Great. Yeah, I think those are very, you know, fundamental problems that take the industry and just finding new ways to perhaps solve it, sustainable ways to solve these problems is going to perhaps lead to far greater adoption, which we, you know, everybody sort of keeps talking about in the ecosystem.
Talking a little about the ecosystem now, and you know, zooming out from Circle, this particular market cycle has seen certain newer trends come in this space that are AI coins and, you know, whatnot. There is always something new that keeps happening in the Web3 ecosystem. Do you have, is there any particular trend that has really caught your eye? You feel that, you know, this seems to be a niche that will perhaps do well in the next, say, year, two years? There are, I mean, a couple of interesting areas are, you know, when you think about, so it’s very interesting you ask that question because I think about, like, so there are infrastructure trends that I see, like, yeah, there are trends because the problem is prevalent, right? Like chain abstraction, intent architecture, for instance.
Intents, it’s a trend, it was at least something which was trendy, that everyone’s talking about intents, but why do intents exist? They exist because your fundamental way to accomplish a trade or accomplish an action is complex and it is hard. So intents are a way to simplify UX. I’m like, sure, that is one way to simplify UX.
And I think that intents are powerful if you can accomplish, if you can say that, you know, okay, get me the lowest price Ethereum with the USDC I have. And then there are, you’re abstracting complexity of like finding which blockchain and which DEX or which exchange is going to give you the best rate and you’re just getting that job done. That’s how it should operate, right? Like, so that makes sense to me.
I think like chain abstraction at ECC in Brussels was heavily talked about, it was a hot topic. There are numerous developers building or talking about it in different ways. Yes, it totally makes sense.
It’s something we have firsthand experience because our customers are facing scaling issues. So, or our user, when we see like user-facing fragmentation issues, like it totally makes sense. So, these are like some of the more obvious things that are like much needed and that’s fine.
I think on the AI front, like another, if you want me to say something which is completely out there, it’s like agents paying each other autonomously is something which I think is bound to happen at some point. So, if you project outwards from, there are like your, the chat, different AI agents that are created with, your language models are open source. You can create special purpose bots that will do certain jobs for you, create like micro content, organize your calendar, take meeting notes and whatever.
And you think of these bots as freelancers. These freelancers need to get paid. How do you pay them? It’s harder for them to get a bank account, but much easier for them to get a crypto wallet.
And so, if an agent has a wallet, you drop and you can code a smart contract where you drop some, if you drop some assets into the smart contract or into the wallet, and if there is enough value to those assets, the agent will do the job for you. And this happens like automatically, it’s easy to program. So, I believe like that is something which will exist.
And now again, I don’t know if this is a, you call it a trend, but it’s something which I think a lot of people do realize and so are excited about or building towards. From first principles, it seems to make sense that these, if you believe that there will be, you know, there are like a series of ifs for any trend to succeed. And you have to find out like if any of these ifs, if then else statement breaks, then the trend is not durable, right? Like, so the assumptions that we have are, if you believe that there are going to be microbots that will do certain jobs for you, we have enough reasons to believe that’s true.
If we believe that they can operate as freelancers and given enough data connectivity, so for instance, if they have permissions to read your email, respond on your behalf or organize your calendar, that already exists. There are like note taking with Firefly or, you know, Clockwise manages your calendar and so on. So that’s already, you can say that, yeah, that is reasonable to expect.
And then you can say that, okay, if these can operate as independent bots that are coded as freelancers and they need to get paid, they can spin up a wallet, they can spin up a contract. That’s also true. So the assumptions are, of course, like they will do a job well.
Assumptions are that you will have recourse if you’re not satisfied with the job. There’s a lot of experience that needs to be built around this, but it seems that this world will exist over the next few years. We do think that, you know, the examples that you’ve given are quite relevant in terms of what is happening right now.
I mean, yeah, as you said that it does meet a lot of the criteria that people have in what AI agents can perhaps do. And maybe this is something that can find a good PMF with a good consumer case, with good utility and, you know, it’ll find good traction. Do you have like a take on real world asset tokenization? I know that, you know, I’m asking this with a touch of irony because you’re doing a USDC obviously, but in terms of assets, you know, other real world assets, do you feel like that the builders who are building in the space are doing a good job? Anything that has caught your eye there? Because again, it’s not easy to do a real world asset tokenization.
I’ve been there, done that. And, you know, it was really hard to do it. Like we tokenized gold and silver on Tezos and it was, there are too many hurdles, you know, and there’s a lot of compliance that is required.
There’s insurers and whatnot. So it’s like a huge list of things that need to be done. But because RWA has again become a big thing currently in this particular market, right? So do you have like an opinion there? Yeah, yeah.
And thanks for asking that question. Like it’s, I think like the RWAs, again, if we think from, you know, fundamentally, like why should RWAs exist? RWAs should exist because the demand footprint with crypto is much larger because it makes your assets available to everyone on the internet, right? So what is the biggest RWA that is created today that exists? USDC is the biggest example of an RWA. Stablecoins are, fiat backed stablecoins are the best example of an RWA, right? Like you have, and they exist because there is demand for it.
So similar to that, like the Biddle token from BlackRock, it is an RWA. Now, when you see this RWA movement, what you’re seeing is the reason you are this, the volume is up or the noise is high around RWA is because we see large traditional players, Franklin Templeton, BlackRock starting to issue their digital assets through Securitize, through Circle and so on, right? So the need for, I think the question is like, what assets make sense as an RWA, right? So that like, earlier we were talking about decentralization and the benefits of decentralization and so on, right? So any kind of physical asset, there are like, there are tokenized real estate. There was, in April, I, at Paris Blockchain Week, I met a company that was tokenizing water, right? Now, the interesting concepts and projects, the challenges are like, how do you validate? How do you protect the user? You mentioned like security and compliance, right? Like that is a big hurdle because how are you going to, how are you going to ensure that the, in case of a dispute, there is someone who’s resolving the dispute.
The demand for print is not global for it, right? Like a person sitting in another small country somewhere buying like tokenized real estate, if that real estate is like, there’s some fraud, they don’t have recourse, they don’t have easy recourse. But in case of a liquid asset, like an investment fund, like something like Biddle or USDC or like a tokenized stock, there could be easier recourse. Like liquid assets to me are like expanding the footprint, digital footprint of the demand footprint for liquid assets is probably makes a little more sense.
But again, like never say never, right?
Suggestions for, you said like suggestions for, you broke off a little bit, so suggestions for builders and web3 companies that are new in the market. Yeah, builders and the, who are perhaps just starting off or you know entrepreneurs who are in the market already or perhaps somebody who wants to join a web3 company, you know, what would be your suggestions? Okay, got it, got it. So if you are, so any web, if you are entering the space and evaluating a new company, I would ask this fundamental question, like what is the value that the company is delivering, right? There are three, generally like every business has three things that they want.
They want to make more money, they want to save costs or reduce costs, or they will want to improve user retention, which leads to again either saving more money or making more money. So grow LTV, find new revenue or lower the cost. So this is like the foundational truth for every business, right? So as a builder, if you are building a new business, think about like how are you going to enable your customers to achieve one of these three.
If you are joining an existing business, deeply question how is this business adding value in one of these three buckets and cut out all the how or the cool technology features they offer and think about like, you know, where the value is coming from. Is it something that is going to sustain and grow over time or not? I think like having a really honest look at the business, despite the hype, despite like the charisma and charm of the people who are pitching you the business, that is a really, really important thing to do. I would completely agree.
I think it’s very important to understand and figure out the fundamentals there. What is the vision? What is the value that is being delivered? And that goes for entrepreneurs as well as folks who are trying to perhaps join the company. Like what is the vision that you’re building on? What is the value that you’re going to be adding? And how are you going to make money? So that is good advice through and through.
Now, on to my last question, Gagan, and this is something I ask everybody who comes on the show. You know, you had also made quite a leap from Web 2 to Web 3 in the early days. What would be your suggestions for somebody who’s facing this same dilemma? Because, you know, you’ve said some, you have said earlier decentralization for the sake of decentralization should be avoided.
But if somebody is trying to decide, you know, whether they want to get into Web 3 as a user or as somebody who wants to move from Web 2 and start building in Web 3, what would be your advice to them for them to start living on blockchain? As a user, be prepared for some pain initially, because we are still, you know, as an industry, we are still working on improving the fundamentals. It’s like just like how you initially when people adopted the internet, there was like dial-up and there used to be Walkman before there was MP3s in music, right? There were video cassettes before there was Netflix. So this, the crypto industry, the crypto experience and UX and scalability is evolving.
So that’s why I say like as a user, you’ll need to be a little more patient. So that’s like one. The, as a user also, like you have to be, you know, very careful, like depending on what your risk appetite is in what assets are safe to use, what assets are risky, which wallets are safe to use, which are risky.
So if you are risk averse, then start with a trusted, like a trusted exchange or trusted party. I think CoinDCX folks are doing really good. They are.
So as an example, I have no affiliation with them, just like based on my understanding and reading. And so, but like start with them versus, or start with like a Uniswap or an Aave, which is, which again might be a leap for a completely new user. But if you use DeFi, you’ll experience the power of what the industry is all about and the ethos of decentralized finance.
It is extremely fascinating to, because of questions, it breaks the mental model of like how a bank should exist and operate and how you can exchange value with anyone around the world. So my advice to the users is come in with curiosity, operate with patience and a little bit of caution, exercise caution, right? For builders, it is that you have to like, you know, start from fundamentals and focus on solving core user problems, core user needs. And like this is an open invitation to builders to get in touch, build with not just us, but like, you know, find the people you, you can, you can understand that are operating with maturity and like operating from very clear principles because your time is really precious and you want to invest that time in things that matter.
So don’t chase the hype train is my one piece of advice. Yeah, don’t chase the hype train. I think that is just the advice to wrap this up with.
Thank you so much, Gagan, for making the time to speak to me today. This has been a really insightful conversation. I’m sure my listeners will enjoy it.
Appreciate the conversation. Thank you so much.