devan

Leading EMEA BD @paxos
Diehard @Arsenal fan
Views are all my own

[devan @devanmoorthy]

I had the privilege of speaking on a panel with friends from @Visa , @meshpay , and @bitvavocom at the @Visa TZero event in Amsterdam last week. There were some spicy takes - but we all seemed to be on the same page - regulation is allowing Europe to move and the time is now!

[devan @devanmoorthy]

@KayBlockchain Do employees in non-public facing roles need their names and faces on the website?

[devan @devanmoorthy]

@AlgoFamily Congratulations MJ!

[Haseeb Qureshi ＞|＜ @hosseeb]

I encounter this type of thinking a lot: "X is just rent-seeking."

You should not try to think this way.

It's often more helpful to start from the place of asking: what if X is not rent-seeking, and is in fact a subtle equilibrium discovered by the market?

I don't think interchange is rent-seeking. I say this after a decade+ of being a stablecoin investor. If you don't understand what you're trying to disrupt, you have no shot of actually succeeding in disrupting it.

So zoom out. What is interchange and why does it exist?

When a consumer swipes a card, the merchant pays a fee. For US credit cards, it averages to a bit over 2%.

Of that Visa/MC take only about 0.15% in network fees. The lion's share, roughly 1.9%, is what's called interchange—it's the piece that the merchant pays to your issuer (that is, whoever gave you your card). Since that's ~80% of the fee, I'll use "interchange" loosely for the whole thing.

So when you buy something from some Shopify store you've never heard of on a credit card, by far the biggest payment is that merchant paying your card issuer 1.9% of your purchase.

What is your credit card issuer doing with that 1.9%? Well, they're rewarding you (more than half of it goes to rewards, this is a huge arena of competition), they're protecting you from fraud and settling disputes, and, of course, they're extending you credit. After all that, issuers are taking home in profit about 10% of their slice of interchange. (Note: Issuers make their real money on interest, not interchange.)

So why does interchange exist? Why do merchants agree to pay it? Is it "rent-seeking"?

The reason why merchants pay it is because without interchange, consumers would be much less willing to buy things.

1. Consumers like to buy items on credit. Don't think I need to explain this too much. The bundling of credit into the moment of payment with zero friction massively changes spending patterns compared to cash / stablecoins.

2. Chargebacks let consumers say "this merchant defrauded me." Visa default sides with the consumer, and steps in if there's a dispute to resolve. This is effectively a private legal system, collectively funded by merchants. But unlike normal law, Visa's law says the merchant is guilty until proven innocent. Turns out, this is great! Siding with the consumer is the optimal equilibrium to stimulate spending in a consumer economy.

This part is even bigger than it seems. Because chargebacks also allow small, untrusted merchants to compete with large ones. Consumers can now have confidence in trying out new vendors, because Visa's legal system is rigged the consumer's favor. Any whiff of a merchant behaving badly and they are punished. This allows new honest merchants to thrive. There's a sense in which big companies don't need this protection, because big companies already have public reputations. It's small mom and pop shops and startups that need this insurance, and the administration of this whole private legal system is paid for by interchange.

3. Theft protection: if your card gets stolen, there are fraud prevention algorithms that detect this and will generally make you whole on losses. If you were using cash or stablecoins and your wallet got stolen, that's obviously not happening. In a world proliferating with more hacks and scams and fraud, you can also think about this as a private police function.

4. Last and most obviously, cards are ubiquitous and international, so accepting cards and the interchange system gives you access to a gigantic network of consumers worldwide.

So merchants are charged a 2% tax (actually less because not all cards are credit, but simplifying) to make this whole scheme work. Of course, the economics of tax incidence says that if merchants are getting taxed, they'll raise their prices and pass the tax along. So merchants pay some of the tax, consumers pay some of the tax in the form of higher prices. And yes, the card networks get a cut for sitting in the middle.

But most of the system is actually about the transfer of risk between consumers and merchants. Interchange has persisted because it serves an important market function that would otherwise have to be filled some other way.

That said, do the card networks do anticompetitive stuff? Yes! The honor-all-cards rule, no-discount rules, anti-steering rules, collectively set rates, and more. They keep losing or settling antitrust cases because they are wily coyotes.

But the core of interchange is actually a market trust function. It's not likely to go away just because you invented a different clearing system. Yelling "rah rah stablecoins, boo rent-seeking" and expecting everything to change is only going to leave you confused at why that's not happening.

Stablecoins play a very important role in how money will move. They are massively more efficient than the correspondent banking system. That's part and parcel of Rain's edge over the incumbents.

But if you want to displace interchange, you have to rebuild the other stuff it does: a worldwide dispute system with a default consumer bias, fraud protection, and a consumer-side subsidy that makes people want to spend with your thing.

Stablecoins alone are only a single piece of that.

[devan @devanmoorthy]

After almost 4 years at @AlgoFoundation, it's time to move on to a new challenge.

I'm extremely grateful and proud to have led efforts to enable stablecoin access on Algorand across @coinbase, @krakenfx , @binance and more - alongside many other initiatives over the years.

Huge thanks to @StaciW_DC, @mintwt , and @eric_ldn for their leadership and support throughout.

Staying in this space - excited to share what's next soon.

[devan @devanmoorthy]

@_JRC1992 @_PhilCosta Movistar only if you have their full package (internet etc.) not just the streaming service.

[devan @devanmoorthy]

@frugalbc The reason is that before you enter into commercial discussions with entities like Chainlink (but really, any counterparty), you sign an MNDA. So "putting it to the community" is not really an option in cases like this.

[devan @devanmoorthy]

@AlexaJaccarino summing up things better than I ever could, as usual. A tough week for sure, and any organisation would be lucky to have any of the people who were affected.

[Alexa G.J. Carr @AlexaJaccarino]

This has been a roller coaster of a week for many of the people who work on/at/for Algorand. The Foundation said goodbye to a significant number of team members, which is a smart decision for  business, but a really difficult one for humans.

In the wake of that, some people have stepped into new roles, which they’re excited about... as they should be! Every change brings opportunity.

The Foundation also finally reached a long-desired agreement with Algorand Technologies to move protocol development into the Foundation. That’s huge, and it opens up a lot of possibility. But it comes with real human impact too! It's not as simple as flipping a switch to move organizations or turn over work that's as complex as running the best blockchain in existence.

I think most people who’ve contributed to Algorand in any meaningful way do so because they genuinely believe in what they’re building and what this technology can do... and that in itself is all tied up in emotional investment in a workplace, in teammates, etc. etc.

In my corner of the world, this week's news means we can consolidate and activate key marketing channels. (@Algorand!) That’s a big win too, and a genuinely exciting opportunity to amplify reach and engagement. We won't squander it!

So, yeah, a week of mixed emotions! Some clouds (and tears), some silver linings, lots of genuinely exciting things brewing. But it was a hard one, and I just thought that deserved a moment of recognition. 🩶

[devan @devanmoorthy]

@EauDoon @CoinMarketCap Majulah

[devan @devanmoorthy]

@WaseemMSalim Think it was more about getting rid of the old name.....

[devan @devanmoorthy]

When do we think this will cross $1m? @alphaarcade?

[Allbridge @Allbridge_io]

Over $600,000 in volume across Algorand.

Our recent @AlgoFoundation integration on Allbridge enabled seamless two-way USDC transfers with other networks.

Multichain without barriers

[devan @devanmoorthy]

@evarodriguez_m @consensus_hk Was great running into you!

[devan @devanmoorthy]

@LucaProsperi @FRONZ1LLA He's an Australian hero. Our first ever winter olympics gold medallist

[devan @devanmoorthy]

Finally!

This has been extremely fun to work on with the amazing folks at @krakenfx

A top tier venue, with extensive fiat rails, supporting USDC on #Algorand

[Algorand Foundation @AlgoFoundation]

USDC on Algorand is now supported on @krakenfx and the @Krak mobile app.

Users can deposit, withdraw, hold, and spend USDC with fast, low-cost transactions.

Kraken will also run an Algorand node, supporting network decentralization and security.

[devan @devanmoorthy]

A real pleasure working with @Allbridge_io team to make this happen.

We're at ~$20k bridged right now, lets get that number up so we've got a proof point for @circle ;)

[Algorand Foundation @AlgoFoundation]

The @Allbridge_io Algorand integration is now live.

Users can now bridge USDC to Algorand from several chains, including Solana, Avalanche, Base, Ethereum, Sui, Stellar, and more.

Interoperability on Algorand is here 🤝

Learn more below.

[devan @devanmoorthy]

@DevJake20 @marcvl @Allbridge_io There's an SDK.

[devan @devanmoorthy]

@thecryptomie @marcvl @Allbridge_io Pera and Lute available on web, working on mobile as we speak.

[devan @devanmoorthy]

@vithushaji Finishing touches on integration and sorting out the operations around liquidity, but soon! I hear you guys :)