Speaker 1: Hey, folks.
Speaker 2: We are recording at Chainlink smart Con event and joining
Speaker 2: me is Sam Fagan, who's the director of Payments at
Speaker 2: Polygon Labs. Sam, great to have you. It's great to
Speaker 2: be here, man, Sam. I'm really excited to dive into
Speaker 2: some details around Polygon. I follow Polygon for years. I'm
Speaker 2: a madic token holder, uh dear that. Yeah, and I've
Speaker 2: been seeing like on r w A, dot x y
Speaker 2: Z a lot of building happening on Polygon absolutely, which
Speaker 2: is really cool. But before we get to all that,
Speaker 2: tell us a bit about yourself and you know your
Speaker 2: history in crypto.
Speaker 3: Yeah, so I've been at Polygon for about seven months now,
Speaker 3: started in March. Prior to Polygon, I was at checkout
Speaker 3: dot com leading stable cooin growth and crypto in the US,
Speaker 3: so working with the likes of coinbase and crypto dot
Speaker 3: com and moonpay to accept Devin credit card payments, but
Speaker 3: also working with web two merchants such as.
Speaker 1: Fiver and upbooring Core.
Speaker 3: Very early stages, I was starting to test what stable
Speaker 3: coin withdrawals will look like the case their contractor or
Speaker 3: someone in the US is hiring someone in Latin America
Speaker 3: instead of withdrawing to local currency.
Speaker 1: As they accept.
Speaker 3: Dollars, they want to hold a dollar nominated stable coin
Speaker 3: and withdraw on stable coins. So it was very early days,
Speaker 3: and I think now we're finally getting to that point
Speaker 3: where we're seeing.
Speaker 1: Some of this adoption. Yeah.
Speaker 3: Prior to that, I was at Coin Payments, leading global
Speaker 3: strategy there. Prior to that, co founded a company called
Speaker 3: omni Cash, which was.
Speaker 1: Doing stable coin rewards.
Speaker 3: We were founded and funded by five Serve and yeah,
Speaker 3: I was doing that for two years. So been in
Speaker 3: and around stable coin payments for about seven years now.
Speaker 3: I been waiting for this moment right now, So super exciting.
Speaker 1: Yeah.
Speaker 2: So what's it like seeing the Genius Act pass where
Speaker 2: the market has clarity around stable coins and everybody and
Speaker 2: their grandma wants to launch a stable coin now?
Speaker 1: Yeah.
Speaker 3: No, we've been looking for kind of the rules and
Speaker 3: the lay of the land in order to really see
Speaker 3: this technology scale and this pay and rail scale. I
Speaker 3: think kind of the first domino was when Stripe acquired Bridge.
Speaker 3: Shout out to Zach Love the Bridge team. Yeah, but
Speaker 3: once that domino fell, it really put everything else into place.
Speaker 3: And with the Genius Act, now these companies that were
Speaker 3: testing and running pocs are now starting to go live,
Speaker 3: so we're seeing enterprises, FinTechs PSPs really starting to go
Speaker 3: live with their first proof of concepts.
Speaker 1: So it's exciting. Yeah, it's really exciting.
Speaker 2: And you know, we have a much more favorable environment
Speaker 2: for crypto and it seems folks are optimistic. They're heads
Speaker 2: down building, innovating, and we got the market structure build that's,
Speaker 2: you know, coming up soon. What do you think about
Speaker 2: the market structure when that gets past and what impact
Speaker 2: it will have on the industry.
Speaker 3: So I try not to comment on pending regulation, but
Speaker 3: I will say that it's just another very important step
Speaker 3: to see who the regulator is going to be, both
Speaker 3: through the commodities and the security side.
Speaker 1: So very excited to see what happens in the coming months,
Speaker 1: Oh for sure.
Speaker 2: So give us a review of Polygon for those who
Speaker 2: may not know what is Polygon, tell us about the
Speaker 2: blockchain and much more.
Speaker 3: Yeah, so, Polygon historically is a legacy Layer two on
Speaker 3: Ethereum EVM compatible. As of really the last year, we've
Speaker 3: been very much focused on payments. Prior to me joining
Speaker 3: in March, we really took a deep dive into our
Speaker 3: data and we saw a significant organic growth in P
Speaker 3: two P volume right now with the number one chain
Speaker 3: for monthly active users for USDCOW and number three us
Speaker 3: D T WOW. So we felt as if we needed
Speaker 3: to really double down and triple down on payments. So
Speaker 3: they brought out myself, my colleague Jamal who's former Bridge,
Speaker 3: former cash App. Shout out to Jamal. We just hired
Speaker 3: John Egan recently. It was a former head of crypto
Speaker 3: at Stripe, and a Shwari who has been leading payments
Speaker 3: at Polygon for four years now was former AMEX. So
Speaker 3: after diving into some of the data, we really realized
Speaker 3: that we wanted to go deep into payments what it
Speaker 3: looks like today. We try to think of ourselves as consultants.
Speaker 3: We're not selling financial services ourselves. We're really the payment
Speaker 3: network for payment companies and enterprises to really get their
Speaker 3: foot in the door for on chain payments. So when
Speaker 3: we're talking to an enterprise or a payment company, trying
Speaker 3: to educate them on some of the use cases and
Speaker 3: trends that we're seeing, also getting an understanding of what
Speaker 3: their current problems are, some of the gaps are, and
Speaker 3: their businesses. Sure, we're finding a lot with the introduction
Speaker 3: of stable coins, payouts and remittances is a natural use case.
Speaker 3: Treasury management is a natural use case. So like as
Speaker 3: an example, we're working with a top three money remitter.
Speaker 3: These remittance companies are whole holding dormant capital right bank accounts.
Speaker 1: So they call it no shoe.
Speaker 3: So they might have a myriad of bank accounts in
Speaker 3: which they're holding dormant capital in order to ledger. Let's
Speaker 3: just say a transaction from dollars to BRL. They're holding
Speaker 3: VRL in a bank account local in Brazil in which
Speaker 3: they have the ledger off. So what stable coins provide
Speaker 3: is the ability to now transact twenty four to seven,
Speaker 3: move money inter company within their bank accounts twenty four
Speaker 3: to seven and limiting some of that pre funding. So
Speaker 3: that's just an example of understanding kind of the use
Speaker 3: case us having payments experience on the other side right
Speaker 3: now applying it to what the technology can provide.
Speaker 1: So yeah, to exciting times.
Speaker 2: And on that note, I read recently that flutter Wave
Speaker 2: selected Polygon as is default blockchain for cross border payments.
Speaker 1: Yep, tell us about that.
Speaker 3: Yeah, super excited about Flutterwaves specifically when I came into
Speaker 3: Polygon I think we're how we're thinking about things. Like
Speaker 3: one of the things we talk about is modernization with
Speaker 3: a purpose. We're not trying to bypass the banking rails.
Speaker 3: We're trying to expand upon it and give access and inclusion.
Speaker 3: And when we think about some of the markets where
Speaker 3: we're going to have the greatest influence, Africa is definitely
Speaker 3: one of them. Sure Utterwave is the largest payment company
Speaker 3: in Africa.
Speaker 1: Wow. So what the use case is today?
Speaker 3: They have a lot of enterprise merchants such as Uber
Speaker 3: and Netflix right now except Nira. Nira is very volatile
Speaker 3: to the dollar. So what they're doing as soon as
Speaker 3: they accept that Nira, they are immediately swapping to a
Speaker 3: stable coin usually USDT, and then now they're sitting on
Speaker 3: a lot of USDT. What Futterwave is going to be
Speaker 3: doing is now accepting deposits in stable coin, swapping to
Speaker 3: a dollar, and then settling to Netflix and Uber's bank accounts.
Speaker 1: In the US. Wow.
Speaker 3: So we're really excited to be the default chain for
Speaker 3: Flutterwave in their new build. But again, I think it's
Speaker 3: US really understanding the use cases being on that side,
Speaker 3: and we're in the business of solving problems and yeah,
Speaker 3: super excited about Flutterwave and downstream as a phase two
Speaker 3: they'll be rolling this out to consumers. So now some
Speaker 3: of the on banks will now have access to dollars
Speaker 3: nominated stable coins by just downloading a digital wallet.
Speaker 1: So super excited. That's incredible on many levels.
Speaker 2: That you have the largest payments company, is it the
Speaker 2: payments company at Flairway?
Speaker 3: Yes, so they're fire so they okay, have deboc credit
Speaker 3: card payments, also do local bank transfers.
Speaker 1: But they're a PSP. Okay.
Speaker 3: So if you're thinking about like Stripe is very big
Speaker 3: in the US. Sure, you have companies like ad In
Speaker 3: and check Out that are big globally. They are an
Speaker 3: enterprise PSP for Africa.
Speaker 1: That's incredible.
Speaker 2: And then you know, I think about you mentioned the
Speaker 2: unbanked and people who don't have financial services and now
Speaker 2: through this technology are able to do that and access
Speaker 2: the world's reserve currency, the dollar via stable coin, and
Speaker 2: they can put that to work even in DeFi and
Speaker 2: so forth.
Speaker 3: Absolutely, No, it's very exciting and it's going to be
Speaker 3: interesting seeing over the next few years. I think a
Speaker 3: lot of multinational corporations are going to become FinTechs. Or
Speaker 3: banks themselves. So if you think about uber like, obviously
Speaker 3: they have large distribution, they're global, Like, what is the
Speaker 3: look for them to have a digital law within their
Speaker 3: experience and for folks to hold stable coins in order
Speaker 3: to create more rewards or user stickiness with their users.
Speaker 1: So very excited about where we're going.
Speaker 3: And I think this technology or this payment rail takes
Speaker 3: us from a system that historically has been really good
Speaker 3: for a few markets such as the US, UK and
Speaker 3: EU right now expands it to everyone and everywhere.
Speaker 1: So very excited.
Speaker 2: Yeah, that's great stuff. Now we were talking before the recording,
Speaker 2: I was looking at r WA, dot XYZ and Polygon
Speaker 2: is up there with the amount of building that's happening
Speaker 2: on it. Beyond stable coins, which is huge, of course,
Speaker 2: are there other tokenization types happening?
Speaker 1: Yeah, so I would think.
Speaker 3: So there's a few products that we're working on our
Speaker 3: payments use cases we're bringing on chain. One of them
Speaker 3: is yield, So we're working with a lot of our
Speaker 3: fintech partners. As an example, Lemon Cash in Latin America
Speaker 3: has introduced highield savings accounts to their end users, and
Speaker 3: that is backed by Polygon, r WA's or our WA's
Speaker 3: issue shoot on Polygon. Oh wow, so they're more full
Speaker 3: vaults than they might have. As an example, Black Rocks
Speaker 3: Biddle or Apollo's a credit in a basket and on
Speaker 3: the back end it will be RWAs on Polygon. On
Speaker 3: the front end will just appear to be five to
Speaker 3: six percent APY and a new savings account for a
Speaker 3: user in Latin America. So that's exciting. We're also looking
Speaker 3: at what effects on chain looks like. Yeah, very excited
Speaker 3: about that. Right now, Polygon makes up about fifty percent
Speaker 3: of the market cap and non USD denominated stable coins,
Speaker 3: which is super exciting, very early days.
Speaker 1: Sharp liquidity is a.
Speaker 3: Very thin in some of those non USD stables, but
Speaker 3: have to start somewhere. And then we're also looking at
Speaker 3: what on chain credit looks like. So there's a lot
Speaker 3: of demands to solve the weekend settlement crunch. Typically a
Speaker 3: PSB or a merchant on a Friday they process X
Speaker 3: amount of money, they won't get settled from their bank
Speaker 3: until Monday or Tuesday of next week. We're trying to
Speaker 3: solve that gap with stable coins. So exciting that it's
Speaker 3: very very exciting.
Speaker 2: Curious about the FX market that you mentioned, because we're
Speaker 2: gonna see the digital u want and the digital yen
Speaker 2: and it goes on and on right whether it's in
Speaker 2: a CBDs C format or a stable coin.
Speaker 1: How that affects the FX market.
Speaker 3: Yeah, No, it's it's going to be super interesting to
Speaker 3: see how it plays out. We're hoping it's a lot
Speaker 3: more of like retail facing experiences versus more wholesale and CBDC,
Speaker 3: but we'll see. Right now, we're working on an FX dex,
Speaker 3: working with partners such as Bitso in Latin America who
Speaker 3: have issued MXN. We'll also have pairs and BRL cop
Speaker 3: We're also working on the Singapore Dollar, which is issued
Speaker 3: by straight x So, working with issuers globally. Yeah, to
Speaker 3: introduce pairs to USDC USDT on O r FX decks,
Speaker 3: which we plan to productize over the next year or two.
Speaker 2: Wow, so many things happening in the blockchain crypto space.
Speaker 1: It's amazing, super exciting man. Yeah, it feels like a.
Speaker 2: Great time to be here building, especially now that we
Speaker 2: have a favorable environment here in the United States.
Speaker 1: I wanted to.
Speaker 2: Talk about ethereum, given that polygons a ethereum layer too,
Speaker 2: and what does the feature of that look like, you know,
Speaker 2: are we going to see a lot more Layer twos
Speaker 2: that are focused on specific things like how polygons focus
Speaker 2: and even corporates launching layer twos of their own.
Speaker 1: Yeah. No, that's a great question.
Speaker 3: Where I see Ethereum always being that trusted security and
Speaker 3: compliance layer where colleaguon fits in. I think we have
Speaker 3: chosen to specialize in payments. I think we'll see l
Speaker 3: twos have their own specialization. We have a hypothesis that
Speaker 3: change will become specialized and optimized for certain use cases.
Speaker 3: High frequency trading might be one. Meme coins might be one.
Speaker 3: We'll see, but we're going to focus on payments. But
Speaker 3: I think Ethereum will always be that regulated core layer.
Speaker 1: That's secure and compliant.
Speaker 3: So Ethereum will always obviously be a very important partner
Speaker 3: to us.
Speaker 1: Yeah.
Speaker 2: I mean ETH is getting so much adoption as a
Speaker 2: layer one the layer twos, But you look at black
Speaker 2: Rock launching Biddle on eth first, right, So it feels
Speaker 2: like it's the you know, bitcoins is digital goal store
Speaker 2: of value and Eth is like this next layer on
Speaker 2: the Internet that you can just build one hundred.
Speaker 1: No, it's that trusted settlement layer.
Speaker 3: Yeah, for this new Internet of value and it's uh,
Speaker 3: it's really exciting and it's definitely the chosen one by
Speaker 3: institutions and enterprises. So we think we're in a very
Speaker 3: good position as an EVM compatible L two to really
Speaker 3: scale payments on chain.
Speaker 2: Oh, for sure, as much as you can share what's
Speaker 2: on your roadmap, what can we expect in twenty twenty six.
Speaker 3: Yeah, I think I touched upon it a little bit. Sure,
Speaker 3: definitely the effect on chain is a very exciting component
Speaker 3: for us. Sure Yield will continue working with FinTechs who
Speaker 3: are really trying to add additional financial services that have
Speaker 3: to do with high yield savings accounts. I think you'll
Speaker 3: start to see a lot of Remen's companies starting to
Speaker 3: introduce their own version of a neo bank or digital
Speaker 3: wallet or a bank account. So super excited to be
Speaker 3: able to support those companies. And on Chaine credit is
Speaker 3: something that I think will be very big in the future.
Speaker 3: Sure and really making settlements seven days a week versus
Speaker 3: the current five days a week. Those are like the
Speaker 3: three products that we're working on now, and I think
Speaker 3: you'll start to see some new ideas come from Polygon
Speaker 3: next year. Which I'll hope you'll be able to share
Speaker 3: next year this time. Yeah, but I think those are
Speaker 3: the three to focus on right now in the marketplace.
Speaker 2: Well, since you're not far from where I live and
Speaker 2: where my studio is, we're going to have to do
Speaker 2: it in person to go through the details.
Speaker 1: That'd be really good.
Speaker 2: I would love to get your thoughts on the tokenization market,
Speaker 2: because we're seeing a massive race there. Folks are tokenizing equities,
Speaker 2: money market, precious metals, real estate, and so forth, and
Speaker 2: it's the big institutions now leading to charge.
Speaker 1: What is your outlook on that market?
Speaker 3: Yeah, I think what's super exciting it's giving access to
Speaker 3: those that typically didn't have access globally. That's what I'm
Speaker 3: really excited about, regarding some of these tokenized money market
Speaker 3: funds issued by black Rock as an example. Sure, I
Speaker 3: think it's really all about access and inclusion. Yeah, and
Speaker 3: these tokenized products are just giving further access and liquidity
Speaker 3: to those that typically in the past did not have access.
Speaker 3: So I think that's what it's about, and it's exciting.
Speaker 1: Yeah.
Speaker 2: And along the lines of what you know you were
Speaker 2: mentioning earlier with Polygon's focus on payments and you know,
Speaker 2: working with flatterwave and different parts of the world where
Speaker 2: people couldn't access the dollar easily, but now in a
Speaker 2: tokenized warn they could potentially access US stocks, yep, and
Speaker 2: other funds and that could change their life.
Speaker 1: Yep. No, yeah, it's.
Speaker 3: I've mentioned earlier like modernization with a purpose and like
Speaker 3: we're just very very excited to be on the forefront
Speaker 3: of giving access to people that in the past did not.
Speaker 1: It's very very exciting, man.
Speaker 2: Yeah, yeah, and I love you know, it's one thing
Speaker 2: to say, hey, this technology is great, but to see
Speaker 2: it applied in the real world and helping I mean,
Speaker 2: that's what it has to be at the end of
Speaker 2: the day, right, yep, that's what I think.
Speaker 3: I hope a lot of us got into this space.
Speaker 3: I know I started watching your podcast like seven eight
Speaker 3: years ago when I first got into the space, and yeah,
Speaker 3: you've done a lot for this industry, and I think
Speaker 3: a lot of us got into.
Speaker 1: It with a purpose driven mindset.
Speaker 3: So we're finally at this I think we've just crossed
Speaker 3: the starting gate across the chasm. Stable coins have product
Speaker 3: market fit and yeah, a lot of it is rooted
Speaker 3: in purpose, which is great.
Speaker 2: Absolutely, Sam great stuff. We're going to have to do
Speaker 2: a long form, but thank.
Speaker 1: You so much for joining on. Man. Thanks.
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