Currency-backed Stablecoin: E-money (NGM) w. Henrik Aasted Sørensen

That's great. All right. So hey guys, and welcome back to Box Money. On this channel, we've discussed a lot about stable currencies, just like how there's been a lot of controversy over Tether, USDT. We use it, but people are afraid of it. We also have algorithmic stable coins we've been talking about recently. And we know that this is very, very necessary for traders because at the end of the day, they want to have both a way to expose themselves to crypto and also to exit crypto too. This question has always been asked. And today we are continuing discussion with the guys at eMoney. So today we have the CTO and co-founder of eMoney, and they're creating a different type of cryptocurrency, a stable coin as well. So today we have Henrik Osted-Soranson. He's a CEO, CTO, and he's talking, we're going to talk to him about a lot of the regulations about what's happening with these type of stable coins and what's happening with eMoney. So welcome, Henrik, to our channel. Thank you. Thank you. So very quickly, I guess, starting off, what is special about eMoney? What's your passion behind this project? We do a couple of things a bit different than the existing stable coins. Our stable coins are interest-bearing, and we are aiming to provide periodic proof of funds that they're actually in the bank account to increase trust in the system. And then we're building on a third-generation blockchain software. We're building on a Cosmos SDK stack, which provides some very interesting properties in that we can do payments in incredibly quickly, like half a second is usually an average transaction time with finalization. So that provides us with the tools for a future where you might be using crypto to pay for stuff in, for example, the supermarket, and where we can compete in timing with, for example, credit cards in that way. I see. And that's interesting, right? Because there's always been this talk about Tether, right? Tether is the number one stable currency right now. It's a way for people to expose themselves to the US dollar, especially we see a lot of movement for that in Asia because it's harder to get US dollars here. So you're pointing at some of the biggest problems with Tether, right? So number one problem, it doesn't bear interest. You save that there and magically, well, guess what? Someone's going to benefit from that interest, but it's just not you, right? The other big problem, obviously, is we don't know if there's actually any audits on Tether. So there's no third-party audits. They always say, oh yeah, we have the money in the bank, but everyone's going to say that, right? But is it valid or is it not? That's going to be an issue. And lastly, about speed as well. So coming to this, you're creating this new currency. So how are you dealing with that? I mean, obviously, I think one of the biggest hurdles of why Tether did things the way they did is with regulation, right? So kind of what regulatory hurdles did you have to overcome? How did you get this on this way? We spent the first two years of the project talking to the Danish and European FSAs and spending way too much time and money talking to lawyers about it. So clearing a lot of regulatory hurdles, finding out what our regulatory status is in order to be compliant. And we managed that, fortunately. And at the parallel to that, we developed the technology. So it's a it's a moving target. There's a lot happening in Europe in this area right now, but we're aiming to follow along and keep an eye on where the regulation takes us and make sure we end up in the right slot, so to say. Got it. So it's always about just getting that regulation and approval done. And it's a time-consuming process, right? So I guess it's one of those issues where it's a lot of work with lawyers and a lot of time with lawyers. Then you see this market. I mean, obviously, it's definitely ripe for stablecoins because we definitely have some issues with Tether. And there's always these accusations that when people hold Tether, they hold USDT, there's always this fear. Is it one-to-one redeemable? What if it loses its value all of a sudden? What's going to happen? How do you prevent that kind of fear going on? We partnered with Ernst & Young to provide the periodic proof of funds. So they will, we expect once a quarter, they will make statements that they looked at our bank accounts and said, yes, this is, these are the balances. So that's fairly simple. I mean, getting into this game is all about trust, I believe. So we need to create a lot of trust in the system that it works. And that we're not cheating on the scales. That's incredibly important. So, so, you know, I kind of always guessed that one of the reasons why Tether didn't, and they're not getting these proof of funds is because there's banking issues, right? A lot of, a lot of banks are not crypto friendly, especially if, you know, you know, they know that this is now a crypto account, you know, sometimes just like they freeze assets that are crypto related. How do you skirt around these issues? Well, we, we, we found a fairly crypto friendly bank and now we spend a lot of resources and time on keeping them, keeping them happy and satisfied and showing them all the documentation they asked for. So, but in the longer term, we'll also be looking for, for probably one or two more banks to, to get that done. Got it. So one of the things here, right? So, so you're, you're, the bank knows that you're doing this. So that's great. I mean, I think that was one of the, one of the issues. And then, then you provide audits with Ernst and Young. So the funds are there. Okay. So next up is the interest bearing aspect, right? So right now, like how much interest can people expect on their funds? How would you receive it even, you know, how, how does this whole thing work? Right? Yeah. So the, the interest bearing mechanism, it actually happens by doing away with the, the usual one-to-one pick that stable coins employ and say, instead of that, we have a dynamic pick where, where we constantly publish the ratio of tokens to the bank account balance. So that means, that means that if you like the short version of that is it's, if you have a proportional right to the bank account balance, so if you have 10% of the tokens of the currency, you have 10% of the bank account. This has, this came about because it's simply necessary in Europe. We had the, we had very low interest rates for, for, for many years now. So it's, it, it was necessary in order to create a business model that was sustainable for, for stable coin. What that then allowed us to do was actually to create a, a token, a staking token where we can, which we can use to, to share in the success of the project, so to say. So the staking token gets bought back with, um, and burned with the, with a part of the interest from the, from the, from the stable coins. Uh, okay. So, so then what, what is the ratio, right? So how many coins are you going to create? What's the differences between them? Which one is a stable coin? Which one is the project coin and the utility coin? Right now we are issuing five stable coins. It's, uh, the Euro and the Swiss franc and, uh, the three Scandinavian currencies, uh, the Danish krona, the Swedish krona and the Norwegian krona, because we're located in Copenhagen, Denmark. So we thought it would be nice to, to have the Nordic currencies, although I don't, maybe they will not be the one that are most, uh, in demand. In addition to that, we have our staking token because our chain is running proof of stake, like, um, most of the newer chains are. And the staking token is called the NGM. Um, and this, what's unique about the staking token is that we, we set aside 1% of the interest that is, uh, that is accrued on the stable coins to, to buy back the NGM tokens. So in, in essence, the more we issue, the more valuable these, uh, NGM will be. But, um, you've said that there's been very low interest in Europe for some time, right? In fact, there's almost negative interest. So wouldn't that mean there'll be negative, uh, buybacks in the past, in the future or whatnot? Like, uh, how would that work if, if the signs are flipped? Well, we actually, yeah, we have had negative interest for a while. I'm actually on my house right now. I'm paying a negative interest rate on my mortgage, which is, uh, you're getting money. Yes. It's a little bit surreal. Um, how we handle that is that, uh, this negative interest, uh, in, uh, will be, um, it's, it's passed on to the end user, which is, uh, of course doesn't sound good, but, uh, when you consider that it's, uh, maybe, uh, 1% per year, it actually evens out to, to, to rather little. And I believe it's, uh, we make up for it by having exceptionally small fees on the, on the chain in large parts. So if you compare it to some other systems or credit cards, for example, I think it, uh, it, it adds up to something good in the longer run when our economy perhaps returns back to normal, uh, it will, it means that, um, holding our tokens will be much like having a bank account and there'll be a positive interest rate, uh, on your deposits. So that's, that, that's a future we can all look forward to. Got it. Got it. Yeah. So, I mean, definitely fingers crossed for a more positive economy. Right. So, okay. So you're issuing out the, uh, euros and three different currencies, um, uh, Nordic currencies there, um, and a Swiss franc. So it's, it's an exposure for a lot of Europeans. Then now, now the kind of interesting part is that you're not directly on Ethereum. You're not on Bitcoin, but you're rather on Cosmos, right? So it's another ecosystem. It's extremely fast. So why do you choose that in the first place? Um, we chose it for several reasons. We like that it has instant finality. Once a transaction is in the block, it's, it's there. It has very high transaction throughput, so we can support, uh, well, we're not going to have high fees or run out of the transactions space for a while. It's also, we like that it's proof of stake, to be honest, uh, proof of work is, doesn't seem sustainable for the longer term. That being said, what we're doing on our, since we have our own chain, we, we, uh, we have the option to, to bridge to other chains. So we're building on the BEP3 standard. We are building a bridge that will bring us to Avalanche and to Ethereum, which should be coming out fairly soon. I mean, it is, uh, it is unsustainable to ignore Ethereum right now. That's where everything is happening. Although the fees are exceptionally high. Yes. So, so basically you chose a chain that's cheaper and then it has cross chain capabilities, right? So you're trying, you're trying to be able to bridge that, uh, make this currency available everywhere. But at the same time, if it's a native chain, it's super fast, right? So it's, it's like magnitudes faster than Ethereum, but which is also like magnitudes faster than a swift transaction, right? If you ever want to do a swift transaction right now, it would take days, right? It makes Ethereum look fast, right? So, um, there we go. Exactly. So we're moving in the right direction overall. Exactly. So, so, um, you know, who do you want to use this? Who's your end user goal right now? Like, well, you know, who do you want this? Who do you want part of your community? Who do you want to use this? Uh, our long-term road is for, to be ready for the future where, where crypto transactions take place in the real world. Um, so someone is paying in the supermarket and they might not even care that the app they're using is backed by, by a blockchain somewhere. They might not know that much like we don't know when our webpage is backed by whatever database. Yeah. That, uh, that future is, uh, kind of far away. So, so for the foreseeable future, we'll be focusing on, uh, getting anchored into the cryptocurrency system and make, uh, make our stable coins available to crypto users and to exchanges and, and, and the whole community. Got it. Uh, and, and seeing there's definitely a lot of competition in this realm too. Right. I mean, it's like, um, almost everyone wants to make a stable coin because obviously, uh, it's a lot of money involved, right? If you can be able to, um, operate like this, you know, what would be your advantage? Like if you, if you had to compete with everyone else, you know, uh, uh, what would be the core driving core feature for people to, to really say, okay, like I want to use me money rather than everything else. Well, one, one advantage we have over the more traditional stable coins is that people can become part of, uh, our community, so to say, by having the NGM token, which, which should, uh, increase in value based on our, our issuance of stable points. Um, then yeah, there's the, the technology of course, so it's really nice. And, uh, our model is also the token model we've created is very suitable for a future where, where blockchains interoperate, where, where you, your tokens, the ones you've issued may not even be on the chain where you issued them. They probably left and crossed three bridges and are now somewhere else that you couldn't predict in a context you couldn't imagine. So that's the, we're ready for that future. We don't need to, to, to have transaction fees on our chain in order to, to make a living or to have things work around, which I think is, is pretty powerful. That's very, very forward thinking. So, okay. So wrapping this up, you know, if people want to find out a little bit more about e-money, what's the best way to reach you guys? Uh, the best way to reach us is to go to our website, e-money.com and, uh, join our telegram group, reach out to, to, to us. We, we're, we're very open to hearing suggestions from the community and working with the community. Got it. So I definitely want to thank Henrik for coming in. I definitely feel like a lot of work has been done in terms of regulation these past few years, and that stable queen ecosystem is definitely going to grow because at the end of the day, it's growing by billions per month at this current point. So definitely having less reliance on one currency, having more and having regulatory approval at the same time as also having the technology to actually push that towards broader adoption. I think that's kind of core here. So thank you, Henrik so much for coming in and we'll see you guys in the future.