10 Highlights From “Stablecoins Are Killing It” Ep. #6 Focused on China’s CBDC & Multis
The first 20 minutes of Episode #6 featured Dr. David Zou giving an overview presentation of China’s Central Bank Digital Currency (CBDC)…
The first 20 minutes of Episode #6 featured Dr. David Zou giving an overview presentation of China’s Central Bank Digital Currency (CBDC) which is referred to as DC/EP (Digital Currency/Electronic Payment). Thibaut Shahaghian, CEO of Multis, than gave an overview of the crypto first banking service. The final 25 minutes were spent on Q&A with the audience. You can view the entire (awesome!) episode below:
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Or you can read my 10 highlights below: :
1. China’s DC/EP Will Have A 100% Reserve And A Traditional Two Tier Bank Account System
The two tier system includes a wholesale part between Central Banks and Commercial Bank, which then issues DCEP to retail users:
2. The DCEP Has “Reserved Space” In The Protocol For Smart Contracts or Application Extension/Programmable script
While the smart contracts will not be available in the early stages of DCEP, it’s anticipated that the ability to propose smart contracts will be widely available. The Central Banks will process smart contract proposals, including thorough studies and testing of smart contracts before any approval is granted and smart contract deployed.
3. The DCEP Uses A Centralized Ledger Based On The Bitcoin’s UTXO Model Enabling Key Features Like Prevention Of Double Spending
Other token like features include security, anonymity, transferability, and divisibility. Since consensus algorithms don’t need to be run, the system is very efficient.
4. DCEP Users Will Need KYC/AML To Access A DCEP Wallet
At the core of the DCEP wallet, like all cryptocurrency wallets, are public and private keys. All DCEP transfers are processed by the Central Bank and require KYC/AML. DCEP wallets will be globally available via app stores to foreign individuals and companies, without limits to how much DCEP can be owned.
5. Multis Is An Application Layer Sitting On Top Of Stablecoins And CBDCs
Multis enables users to have a bank account that runs both cryptocurrencies (largely stablecoins) and traditional currencies. Multis helps reduce the social and technical risks associated with using cryptocurrencies while enhancing the ability to use cryptocurrency for normal banking transactions like payroll and payables. Multis’ mission is to enable Web 3 innovation with Web 2 ease of use.
6. The Multis Tech Stack Leverages The Composability Of Web 3 Features Via Smart Contracts
Multis avoids taking custody of assets by locking them in smart contracts and using software based multisig wallets. So Multis can run from any computer with bandwidth. The example below shows how Multis uses different “money legos” to make earning interest on stablecoins (via Compound) a simple process for it’s business banking clients:
6. Cross Border Payments Is The Dominant Use Case for Multis / Stablecoins
The breakthroughs that Multis enables via stablecoins is 1) the instantaneous sending of funds across borders 2) without fees. Treasury management (i.e. earning interest up to 5%) is the second most popular use case for Multis.
Q&A
7. The Chinese Central Bank Will Still Enable The Use of Cash
The broad use of Alipay and WeChat Pay has dramatically lessened the use of cash across China. And that trend will be accelerated by the introduction of DCEP. But China will still allow the use of physical cash as some people don’t own a mobile phone or are not facile with new technology.
8. DCEP Will Be Global, Without The Need To Use Clearing Banks For Cross Border Payments
Even withKYC/AML, DCEP will be open to everyone. So American citizens can exchange U.S. dollars for DCEP.
9. While DAI Is Ideologically Preferred By Those In Crypto, Less Tech Oriented Companies Prefer USDC
First, most Multis clients are based in the U.S., so USDC makes sense for them. Second, USDC seems secure in terms of being backed, even though it’s centrally issued. USDT is about 10% of stablecoin usage on the Multis platform. DAI does not have broad usage on Multis, in part, because of regulatory uncertainty of how it’s classified.
Payroll is 90% of transactions on Multis, with vendor payments the remaining 10%.
10. Multis Addresses Regulatory Uncertainty In Europe On a Country By Country Basis
For instance, in France, stablecoins are considered foreign currencies if they are backed by foreign currencies, like USDC is backed.
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