PayPal USD and Solana (Breakpoint 2024)

0:00Hey, everyone. As you know, Solana is one of the ecosystems I'm the most interested in. I've been incredibly bullish. I love to see the vibrancy of what is happening in the space. Unfortunately, I couldn't make Breakpoint this year, but the stories have been amazing. I heard the talks are incredible, and we're really proud of Real Vision to give you talks from Solana Breakpoint 2024 in Singapore. I really hope you enjoy them.

0:37All right. Good afternoon, Breakpoint. Good afternoon, Singapore. are you guys ready for some payments content? It's coming up. All right. Hey everyone. No one better to start off the payments content than Jose Fernandez de Ponte, the SVP of crypto at PayPal. Thanks so much Jose for joining us today. Thank you for having me. Before we get started, I think there is a moment for us to pat ourselves on the back or congratulate ourselves because this was a very monumental thing that happened. We had one of the largest payments companies in the world. issuing on Solana is basically the first chain.

1:14I mean ETH L1 is like our DevNet, right? Like you you practice some stuff on ETH but then when you want something that really works you run it on Solana. Solana is now the canonical chain for PYUSD. It's the more PYUSD issued on Solana than Ethereum and it was one of the fastest growing launches of any stablecoin on Solana. So let's make some noise for this.

1:38So Jose, we've discussed this in past forums, but maybe just kind of starting at first principles, can you discuss why PayPal decided to issue a stablecoin and why on Solana is the second part of that question? Yeah, I think it's a three-part answer. PayPal has obviously been in payments for the best part of the last 25 years. And we are in crypto and we are in digital currencies because we are in payments. This is the first time if... I myself have been in payments for 20 years. If you look back at fintech innovation, 90 % of that has been innovation in UX and innovation in fraud. Not a lot has been innovation on fundamental payment rails.

2:15So when we started to explore blockchain protocols and we look at, oh, we can actually move value here between countries instantly. We can move it at a speed that is 26 times cheaper than ACH, that is 400 times cheaper than checks. And this was about four years ago. So I say, it will take a while, but this is too important for us not to have a chip on the table. So that's when we started to support crypto on the PayPal and Venmo apps in a few countries. That's when we started to go with our stablecoin project that went live last year. The first chain was Ethereum. We all know that Ethereum is not the best solution for payments.

2:55When we were looking at the primitives, if you're in retail payments, you need to be able to do a thousand transactions per second at least and you need to do a few of the things that are that differentiate a payment from a transaction sometimes when you're on the crypto side people talk about payments when actually they're only talking about moving value from one wallet to another wallet there is a ton in addition to that that you need to do there is a you need to manage chargebacks you need to manage confidentiality of transactions so it was very easy when when we're looking at where do we go next and what is the right chain for payments to look at what you all were building.

3:30It's not only the speed and it's not only the throughput that are important. We will talk about token extensions. Token extensions was a big bit driver for us. Very cool. So I think one thing I want to quickly go over what PayPal brings to the table because I think there are sometimes two camps of people. Some people that are in payments get super excited about PayPal because they understand the assets that it brings to the table. Other people are like, well, whatever, it's another stable coin. So very quickly, I want to talk about some of the assets, and then I want you to tell me which of these you think you're most excited about.

4:04So let's start with we've got the PayPal wallet, 400 million users globally. PayPal checkout, 30 million merchants, basically. We've got Braintree. We've got Venmo with 90 million users. You have a PayPal credit product. You've got Zoom, which is a remittance business. You have HyperWallet, which is a platform for global payouts. You have Zettel, which I didn't even know about, which is a mobile POS. So I think some of the things that people get excited about is this great array of assets. I know it's a long process and a big company to start integrating. Where do you see sort of the roadmap and which of these assets do you think are sort of the low-hanging fruit?

4:43So for all of you in the room who are building and need payment capabilities for what you are building, think about there will be obviously, and there are, other stable coins on Solana. There is not another one that is enabled for transfer extensions, so think about that, for token extensions. So think about that as well. But the uniqueness of building on top of BUSD is getting access to the PayPal to site and network. All those assets that the Shiras were talking about are many that we don't really talk about. But think of where do you have an stable coin that can be deployed for 400 million consumers, that can be deployed for 40 million merchants that moves billions in remittances cross-border.

5:23All that is going to be available over time. One of the reasons that we decided that we were not going to design that there is not a PayPal blockchain. We didn't want to go permission. We wanted to build on open source because we don't operate on the blockchain side and we don't operate on the protocol side. We operate on the application and the UX part of it and we want our engineering teams to work on deploying our stablecoin into each and every PayPal property that you can find out there. And it's going to take us years. Not everything is deployed right now, but we believe in open source technology, we believe in deploying in the places where developers are building, and we believe in making our network available to others.

6:08So kind of on that vein, I mean, there's a lot of people talk about how do we get crypto to mainstream. there's a lot of chatter about base and base's ability to leverage you know 70 million coinbase users i see paypal as the ability to have a beautiful on ramp you know seamless on ramps to get you know 300 million users so where um like where do you see that because because right now i think the on ramps there's some limitations geographically but like i think that's to me that like the vision of onboarding all these hundreds of millions of people in crypto that's a roadmap problem is not a scientific problem.

6:46Those things will happen. Amazing. Now think about it. I think that you make a very, very good point. The population that uses PayPal is basically, think only about, for instance, the U.S. The population that uses PayPal is not a population of people who are already crypto adapters. They are not crypto experts. It's the population of the U.S. And so if you want to get access to something that is very, very mainstream, you need to be into the big platforms. And I do believe that you will see over time more and more use cases that might be just regular fintech and payments on the front and stablecoin on the back.

7:22And stablecoin will be used as a settlement layer. I have a ton of respect for the Coinbase folks and what Base is doing and what others are doing. I think it's really, really important that those ecosystems exist. But where we help is in bringing that into the mainstream. The fact that when we started our crypto product way back in 2020, 70 % of the folks who were interacting with our crypto product, who were buying Bitcoin on the Benmo wallet, we were their first crypto experience. They had never interacted with crypto before. So having experiences that are gateway experiences that get mainstream economy and mainstream users into digital currencies is something that is, A, fundamentally important.

8:05B, something that you need to go and find them in the platforms where they are. Got it. You mentioned, you talked a little bit about token extensions, and we have limited time, so we won't talk about all the different features that can be enabled. But I think confidential transfers is probably one of the killer features in payments, particularly for institutional and enterprise users. How differentiated a value prop do you see that in payments? Or how necessary do you think that is for stablecoin payments to go from where they are today, which is just the tip of the iceberg, to becoming much bigger in enterprise payments?

8:42We are in the market every day selling enterprise clients on stablecoin. One thing that we have realized very quickly is that the first client that you have at an enterprise is the CFO. It's not the head of e-commerce. It's not the head of marketing. It's the CFO. Because that's where the value is the most evident. when you're taking to someone, hey, you can move money here at a fraction of a cent. You can settle on weekends. You can repatriate funds from cross-border. It's a very rational conversation to have. What you're not going to convince the CFO is, hey, use us to distribute payroll to your employees.

9:18And by the way, each and every transaction is going to be posted on-chain, and people can see how much you're paying on-chain. Or you're a public company, and you're accepting payments on a stablecoin. And look, all hedge funds out there are going to be able to see your transaction activity before because everything is posted out there. So confidential transfers are absolutely something that is part of the MVP that you need to be able to build payment products for enterprises on top of stablecoins. Got it. So our audience tends to skew to developers, builders, startups. What do you think is missing out there?

9:53I mean, obviously PayPal is the 900-pound gorilla, but there's huge industries of small companies that can build around, right? That's always happens in fintech. Anything you would encourage people to look at, any categories, like any messages to the developers out there to build on PYUSD. Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? you'll be able to trade it in just two clicks.

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11:03Not all applicants will qualify. Plus500, it's trading with a plus. I can tell you what we are very focused on because I think that's where adoption will happen first. We are spending a ton of time in cross-border. cross-border payments is probably where adoption will happen first. We are spending a ton of time on B2B use cases and enterprise use cases. And we are spending a ton of time on the CFO side of the house. And to do that, and there's a place where I would encourage developers to look into, once that you have the substrate, once that you have the blockchain and the features on top of the blockchain that you all have built, you need to reduce the friction for the folks who are going to be building on the enterprise side.

11:53When you're looking at payments, one of the reasons we enabled very recently ENS for on-chain transfers on the PayPal platform, because it is important that users have a human, readable way to direct payments to one another. But there are going to be other things that will be required. Integration between something that is very important is to give institutions and enterprises and small businesses an easy way to hold digital assets. The accounting treatment is difficult. CFO doesn't want to be involved on whether they need to market the digital assets because the price is going up or down. And integration with existing platforms, the fact that you need to make it easy for a corporate user, they will not run a different tax ledger to deal with your product on stablecoins.

12:38They will not integrate with a keep a spreadsheet on the side. It has to be integrated with ERPs. There is a ton of work in that middleware between enterprise-grade payments products and the blockchain where there is a ton of space for the community to go and build. We've got a couple of minutes left. One good example of PayPal eating its own dog food, as they say, is PayPal Ventures. And we actually have a special guest. We were talking a little bit about how venture funding could sometimes benefit from just-in-time. You gave an anecdote about somebody closing around and needing the funding right away, right?

13:17So that's interesting. Yeah, first of all, public service announcement. I don't need to tell this to this crowd, but if you all are racing, we tell that. Our ventures team, tell that to all the startups. If you want to get a check from PayPal, we don't do checks anymore. We do want to send transfers to wallets. And as you were saying, we were making an investment in a different company. We were going through due diligence and the like. The closing happened on a Friday evening after banking hours. The company wanted to announce the round on Monday morning. There was no way that we can get the money there through wire transfers or banking rails.

13:48So we just sent them Stablecoin and hit their wallet. Lawyers were happy. They announced the round on a Monday morning. If not, it would have held up the announcement by a few days. And so with that, I wanted to invite Omer from Chaos Labs, who is the most recent recipient of PayPal Ventures Monday.

14:12Yes, sir. Thank you. Thank you for having me, guys. Really excited to be here. I'm Omer Goldberg. I'm the founder of Chaos Labs. We're a leader in on-chain risk management. So we have the privilege of working with the biggest decentralized applications on Solana with the biggest decks, Jupiter, Aave, DYDX, and GMX as well. Recently, last week, we announced the launch of Edge Protocol, which is a price, risk, and proof of reserves oracle meant to facilitate the growing DeFi economy across all the chains. We launched it with Jupiter and have already processed over$40 billion in transactional volume.

14:54We're really excited about it and what's even more exciting is that we got to build it with our long-term partners PayPal in mind. And your fundraise came by a PYUSD. And the fundraise what? Your fundraising is your check. You didn't get a check. You got PYUSD for your... Well, exactly. And what's really great when you're aligned with your partners and how excited we are for everything that's being built in the Solana ecosystem, we decided to do this investment a little bit differently. So instead of writing a check in the traditional sense, the folks at PayPal made their first investment on Solana with PYUSD, which was completed several days ago.

15:30So this is a new one, and it's just a testament to how excited we are for everything that's being built in the growing Solana ecosystem. For anyone who's going to be here later today, if you're interested to speak about oracles, risk management, AI, prediction markets, we're going to be here. We'd love to connect. We'll be here after this. Thank you, guys. Do you have a video to show? Oh, yeah. I think there's an animation to show the investment itself. There we go. an additional 4 million in PYUSD to the 60 million Series A which we previously announced a few weeks ago done on Solana thank you to PayPal thank you to the foundation proud to be investors alright thanks everybody thank you thank you Jose

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