So, today I'm going to be talking about retail banking built on chain, which is exactly what we're building at Bleep. I will try not to make this into an ad, but instead to describe a bit about the challenges, the opportunities, and some of the decisions that we have to make while building it. A very quick intro on myself. My name is João. Before starting Bleep, I used to work at Revolut.
I was building their card issuing program, and right now I'm building Bleep, which is attempting to build a sort of retail banking experience completely on chain. For today, I want to break this presentation into three main parts. So, I want to start by talking about why should we be building on chain? What are some of the key advantages of doing it this way? Then I want to talk about about how should we do it?
What are some of the key decisions that you can make? And finally, I want to I want to discuss a bit of the what are what I see at least are the biggest of opportunities when you are building such a such a such such an app. Cool. So, starting with the why. I'm not going to talk about ownership.
I'm not going to talk about centralization. I'm really going to talk about things that I feel are impacting and are giving us sort of advantage against traditional retail banking. So, the first thing is global expansion. This is one of the hardest challenges you can have when you are building a traditional fintech because every time you're going to a new market, we are essentially are going to have to tell the government, "Hey, I'm going to be keeping funds from your citizens." Which means that you are now be seen as a risk because if you're going down, you might bring some of these citizens with you.
So, this means that every time you're going to a new country, we're going to have to spend a couple of millions getting a license and be basically being able to prove that if you are going bankrupt, you're not going to take the customer down with you. And this is one of the big advantages of building on chain because you can build it in a non-custodial way, meaning you can build it in a way where you are not a risk for anyone. If you go down, that's okay. The customer still has the money and this makes it much much easier when you are trying to expand because you don't have to go for a banking license, for an EMI license. You can really almost just launch there.
Second thing is composability. When you are building on chain, you are built basically able to leverage what everyone else has been building so far. You are able to pick these LEGO pieces on DeFi and build amazing products. And if you are making this comparison, for example, if you're doing it in a traditional retail bank, you need to get all of these different providers with different APIs. You need to sign different contracts.
They then don't work together because they were not just built that way and you need to end up spending so much more time just trying to assemble the basic product. And the final one is network effects. So, imagine this. When Revolut started, when PayPal started, right? From it took them about, I'd say, 10 years to go from a point where the first few customers are joining to where customer when a new customer is joining is thinking, "Okay, I'm going to join this network where I can instantly send money to everyone, right?"
But when you're building on in on chain environment, there's already, like, you're building in the same ledger that everyone else is building. There's already 600 million customers there. So, you have this benefit that they took years and years, almost decades, to build. You get it from the get-go and that's extremely important. And having all of this advantage, that's what we believe that banking 2.
0 is going to get built on chain. And I built I think we started with traditional banking. So, when you have Bank of America and JP Morgan Chase, then you got these uh fintech players where they were essentially building on top of the exact same rails, but they were giving you a slightly better UI or even lower fees sometimes. But now what you're able to build is you're basically able to build for the same experiences like savings, investing, payments, but you're able to do it with radically different technology. And that's really going to be a big advantage and that's why I really think banking 2.
0 is going to get built on chain. Going to be able to offer savings accounts that are backed by high yield DeFi products. You're going to be able to invest to create investment UXs where everything you're just leveraging tokenized products. You're able to going to be able to send to or to create remittance products where you can send money instantly across the world in a couple of seconds. And really a lot of things that are better just because they are done on chain.
So we talked about the why, why it's important or why it's an advantage of building on chain. Now I want to talk about some of the decisions that we had to make at Flip and I think in general when you're building on chain, you're always having to make. So the first big one is should you build in it in a custodial way or non-custodial way? And again, I think this decision shouldn't be taken from a ownership perspective. It shouldn't be taken from a decentralization point of view, but it should be taken from a product point of view.
What can you build better if you're doing it non-custodial versus custodial? And I think the main thing is abstracting complexity and speed to market. Those it's really hard to hard to argue against the fact that if you're doing it in a custodial way, it's going to be much easier. It's going to be easier to abstract the fact that there's different chains, there's gas, there's there's slippage, there's all of these transaction signing that you need to do. And that's and the fact that you don't need to simplify all of those things from the start, it means you're going to be much faster to get to market.
But then, if you are willing to do the effort there and to build this partner and custodially, there's really three big advantages. So, the first one is what we talked about before, regulation-wise. If you don't have customers' money, you're going to always going to be less regulated than if you have customers' money. Second thing is efficiency flows. Essentially, if your customers are transacting in the settlement layer, which is on chain already, you don't need to act like this middleman.
You don't need to worry about treasury, you don't need to worry about your liquidity or bringing these assets in. No, they're already transacting where the settlement is happening. And finally, you're able to leverage building blocks much faster. So, you build this Let's say, for example, an unhosted wallet, and you're it's much, much faster to then connect it to these DeFi protocols, where you can do swaps, you can earn yield, than if you do it in an custodial way, where you are essentially the middleman. So, you need to integrate with these protocols, then you also need to integrate with your user experience, as well.
The The second thing when building on chain, and you need to really be careful about this, is you cannot outsource the complexity to the user. So, in our case, we built an unhosted wallet, uh but we didn't really want to pass the the security burden. Like, nobody wants to be, let's see, security officer for themselves. Like, nobody wants to have to worry about how do I keep my keys, how do I make sure they don't get stolen. Nobody wants to hear about as well all of these unfamiliar crypto jargons.
So, for example, having to learn what staking is, what um what slippage is, like, all of these things is just not possible that you can ask from a retail audience, and you need to remove all of the friction. So, you cannot have uh users worrying about if the assets are on one chain or the other, if they have gas gas to pay for the fees or not, if they are if they are going to be eaten by slippage or anything like that, like just something that you cannot outsource to the user. Uh the way we solve it at Leap, there's multiple ways to do it, is we basically have these a bit more complex architecture where we have an MPC wallet that prevent us from having to ask the customers to keep all keep the keys in a piece of paper, so we use email and account and cloud recovery. We then build account abstraction uh after that so to make sure that the user doesn't need to know anything about signing transactions, about chain, or any of that. And then we have a paymaster so that we can pay for all of the fees on behalf of the user.
The other thing is we need to remove barriers to entry when building for retail customers. Because imagine this, you you build this beautiful wallet, all of the experience is native, you're able to deposit into DeFi protocols, you're able to trade, like uh even my mom is going to be able to use this app, right? But then, when it's time to top up, you click top up and you show them this iframe that sends them to another app. Every they want to top up, they're going to be paying 2% to to have money there. Like that just doesn't really work for a retail customer.
Um it's really poor UX as well and a retail customer is not used to pay to get in, right? Like nobody here when they are putting money in their fintech app is getting is paying to get in, right? So, that's really something you need to be very careful about. The way we solve it at Leap, we build everything in-house, we build our own OTC so that you are able to come in with euro and you're converting in euro to euro stable coin one-to-one, the same for USD, you're able to bridge assets across any chain, but really just trying to make it as simple as possible for someone that wants to start interacting to be able to. And finally, uh when building for retail, I think it's this one is really important, we need to move away from this crux of uh tab-centric UX where you're supposed to have your wallet, but then you need to go to all of these apps differently, independently.
This is really hard for retail because first of all, you're never going to find the best apps. Like you're never like as a retail customer, you're not going to do that whole homework that we are all doing where we are trying to find okay, what's the risk of this protocol, who's building it, as as their Twitter page, what are they been engaging as their telegram, like you retail user is seemingly not going to do that, which means that they're going to be locked out of the best benefits that you have when you are on DeFi. So now, we've seen the why. We've seen the how, and now I want to discuss some of the things that I think are the biggest of opportunities if you're building for retail and for banking specifically. So the first thing I think has been talked about here is the high yield savings account.
I think this is the biggest opportunity there is for us to bring DeFi into the masses and and blockchain into the masses. There's 62 trillion dollar in banking deposits right now. And what I think DeFi introduces to to retail and to other people is really this novel asset where you have a risk asset with a very good risk reward profile. So think about it. You have an asset that in terms of risk, I would say of course it's riskier than having money in a bank account.
I think that's really hard to argue against that. But is but it you could make an argument that it's actually less risk than some of the bonds that are out there. But when you're looking at the yields, the yields are much higher than having money in a bank account or even having bonds for that matter, which I think make this asset extremely interesting for retail users. And the other thing is we know that this is something retail really care about. So one good example here in Europe that everyone should be familiar is Trade Republic versus Revolut, right?
Revolut has 10 times more customers than Trade Republic. This is a fact, like it's actually three 10 times more customers than Trade Republic, but Trade Republic has three times the amount of deposits that Revolut has. Imagine that. And what's the reason? Because Trade Republic was offering 50 bips more, 0.
5% more on deposit than Revolut has, than Revolut was. So, imagine that. Just 50 bips was the difference for people to make the switch and to be willing to put the money into Trade Republic. Think of what can we do with the different by yields that we are having access to. What are some of the problems that we have still?
They are still, unfortunately, mostly USD based. So, even for Europeans, like just here in Europe, we have around 10 currencies. So, it's actually quite hard to convince people to go to make a switch from euro to USD and then make deposits. We are missing a lot of stablecoins as well. I think about Poland, for example, like they are using PLN, in Denmark, DKK, like they don't have access, like we are just not able to serve those customers because we don't have those stablecoins.
And the on-chain effect is there's still some work to do there. It's still better to trade if you're going from euro to dollar or dollar to euro. Most of the time you're going to get better rates if you're trading it in a centralized way than in a DeFi uh setup. The second thing that I think is going to be huge opportunity is going to be instant remittances. There's a $860 billion a year market, and a lot of these corridors are still completely broke.
Like one that we are actually exploring at Libra, that I think like just such a perfect example is the Brazilian to Portugal corridor. A normal person that is sending money from Portugal to Brazil or from Brazil to Portugal is paying on average two to three percent, and it takes about a day for the money to arrive, depending on the amount that you're sending. And that is crazy because this is something that if you do on-chain and if you are using stablecoins to do the cross-border route, you can do it in seconds. And there are so many examples of corridors that are experiencing exactly this. And this is really a problem that I think like retail banking can solve.
It can compete and outperform any of the current providers. Of course, there are still some barriers that we need to solve. The last leg or the last mile is still not super simple because when you are going through, for example, uh USDC to Brazilian Real, where you want to do the last mile, it's still They are introducing their own Mika regulation, but it's still not properly regulated. So, sometimes you have some uh glitches uh in the providing the services, but this is something that is getting fixed. And I really hope that as a industry, we're going to be able to take advantage of that because it's really something we can shine.
Another one is uh all-in-one investments app. I think uh if we were to try to build this on a traditional fintech, imagine an app where you can trade all the assets in the world from stocks, crypto, commodities, and um and ETFs, we are talking about a road map of maybe 4 5 years, 20 million dollars that you would need just on the licensing part, integrating all of these different providers, and then be able to create a similar experience across these different settlement players. Like, it would be really complicated to do. This is what Trade Republic has been trying to do for like multiple years now, millions and millions of dollars spent. Compared to this to DeFi, you build a wallet, you integrate with a DEX, and in a couple of weeks, you're going to be able to trade essentially any asset in the world, tokens, and the tokenized assets as well.
Like, that's such a that's such an advantage of what we've built here on the blockchain that it's going to be, I think, one of the killer products out that we're going to be able to put out there. Of course, also some barriers uh to go through. The licensing regime is not super clear yet on if you're a wallet and you're doing this, it's outside of regulation, but is that really okay? And we still have some liquidity problems. I'm sure like if if you've tried to do for example trade stocks on chain during the weekend, the prices can be a bit random because the automatic the AMM is just not have that much liquidity to keep the price ongoing during the weekend, but it's a problem that we are that people are working through and I'm pretty sure it's going to get solved relatively soon.
And then the final one this one for me I built cards that travel. So this I know this is a big one which is the instant merchant payments. I think cards are the payment with the most middleman. Like there's just so many people eating a fee when you're making a payment with your debit card and it it's something that the one paying the fee is the merchant, right? Most of the time he's paying 2%.
Maybe sometimes it pays four or five if it's an international payment. And this is a problem that blockchain could solve so easily from a point of actually exchange of monetary funds like from the merchant from the consumer to the merchant directly. Um however, of course there are barriers for this still. Merchant acceptance. I don't want to say it's zero because there's some people doing a lot of good work here, but compared to Visa and MasterCard it will be a couple of peeps, of course.
It's going to be really hard to replace what Visa and MasterCard have done which is essentially okay. They have this settlement layer that they allow, but then they have all of these business development, all of these customer support and business support to make sure that they are accepting and being able to train to accept these payments. And most of all I think this is this one we are actually on a race with. Either we are going to be able to use blockchain to replace Visa and MasterCard fast enough or these guys are going to be the ones building on top of the blockchain. They are going to try to close the gap on as much as possible there and even though they might not be able to close it completely because they still have this whole infrastructure on top, maybe they're going to make it super hard for us to make the pitch after because right now the difference in fee is 2 to 3% and in the future it actually might be quite lower than that if they are able to build on top of the blockchain as well as well.
And that was it today, so thank you so much.
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