Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Bob Summerwill: Sweetbridge – Rewriting the Operating System for the World Economy

Episode Date: March 18, 2018

According to the World Bank, universal financial access is vital to reducing poverty, and lack of access to credit plays a significant role in widening inequalities between developed and developing nations. For producers at the end of the supply chain, and who typically have little access to capital, waiting for customers to pay for their products puts them at high financial risk and threatens their livelihood. What if there was a way to bring more liquidity to global supply chains, by allowing anyone to create liquidity from their existing assets. We’re joined by Bob Summerwill, Community Ambassador at Sweetbridge, an ambitious project that aims to change the way global business operates at a fundamental level. While supply chains account for about two-thirds of the World’s GDP, value is trapped in non-liquid assets sitting in warehouses, on store shelves, or in the form of outstanding invoices. Sweetbridge acts as a sort of OSI model for global business. In the Sweetbridge economy, working capital is freed up by enabling individuals and organizations to borrow from themselves interest-free. Topics covered in this episode: Bob’s background as a game developer How Bob got involved with Ethereum and his role at The Ethereum Foundation What is the Sweetbridge and how it aims to transform global business How one can use Sweetbirdge to collateralize assets and borrow money The different protocol layers of Sweetbridge How Bridgecoin and Sweetcoin work, and their respective roles The role and goals of the Sweetbridge Alliance The upcoming token sale The project roadmap and upcoming product releases Episode links: Sweetbridge Sweetbridge Whitepapers SweetTalk with Vinay Gupta & Scott Nelson This episode is hosted by Meher Roy and Sébastien Couture. Show notes and listening options: epicenter.tv/226

This is Epicenter, episode 226 with guest Bob Summerwill. Hi, welcome to Epicenter, the show which talks about the technologies, projects, and startups driving decentralization and the global blockchain revolution. My name is Sebastian Magu. And I'm Meher Roy. Today, we are covering Sweetbridge, which is a project that is seeking to create a stable coin and enable participants in the Ethereum ecosystem to have more liquid. for the assets they might

possess. On our show is Bob Somerville, who's been an old member of the Ethereum community, has worked in the Ethereum Foundation, Enterprise Ethereum Alliance, and now Sweetbridge. Bob, welcome to the show. Thank you. Good to be here.

You've been in the IT industry for a long time and then you transitioned into blockchains with Ethereum. Tell us, tell us, how you've made this transition into blockchain technology and what attracted you to EZERM in particular? Yeah, for sure. So I started programming when I was 10 years old in 1984 back in the 8-bit days. My father was a self-taught developer who built a library and sort of show. shop system for stop taking of a library at the university who worked.

It would bring his computer home in the evenings to work on that. A curious child, well, you know, what are you doing, Dad? What's this about? And so I got hooked quite early there. I ended up studying computer science at the University of Leeds, computer science and AI, and was lucky enough to meet somebody on my course who was working in the games industry.

So my first job straight out of university was joining a Cynosis, a Sony subsidiary in the UK. And I remember at the time, it's not a real job, right? You can't get paid to do games. That's not a real thing. Always sort of thinking, well, I'll get a real job at some.

some point. But yeah, that was 1996. And I moved to Vancouver to work on FIFA. I did six FIFA, I did 20 AAA games for EA sports over those years. FIFA, NBA, NHL, SSX, works in central technology, build systems, configuration management, automation testing, lots and lots of collaboration projects. Because EA

has got about 10,000 employees, you know, 20 or so studios around the world. So you do get lots of these, you know, they're quite decentralized in a way. You know, lots of, lots of companies which were independent that were acquired. So you have, you know, you have different cultures in different studios, different teams. So working on, on those collaboration projects, I think will really set me up quite well for coming into blockchain. So I left EA in

2014, really sort of feeling the need to do my own things, you know, feeling trapped in a large hierarchy that acted as though they owned me, they owned my brain and my thoughts. Real inability to work on open source projects to work on side projects. That's really what led me out. First into mobile and wearables, but then in 2014, I made me a brand guy called David Lowie, who'd been into blockchain from very, very early, said his first Bitcoin purchases were at five cents. He used to own Bitcoin.com many years ago.

He flipped that and did quite well. And he took me along to decontrol to the sort of co-working space and meetup place here. that was sort of Bitcoin 2.0 era, you know, sort of ripple just sort of appearing, you know, talking about pegging and side chains and dreams of all of the things that could be done on top of blockchain. But, you know, none of it was a reality at that point. The Ethereum white paper had just been released. But, I mean, this is probably January, February 2014. So, you know, not, not, again, just sort of talk at that stage.

but later that year Vitalik was actually in Vancouver coming through spending a day with David that was prior to the foundation launching still even all the crowd sale so yeah I got to meet

Vitalik in sort of I think it was July 2014 I posted to my Facebook page that day I have met a genius nobody none of you will have heard of this guy, but he is going to be world famous in a few years. And, you know, really just saw an awful lot of potential there.

Though I remember saying to him at the time, so it's like a single-threaded computer for the whole world. Like, how's that going to scale? You know, in an era of, you know, cloud computing and giant resources, you've got something that's sort of like a, you know, an old PC of the 80s. and it's like, well, you know, I've got ideas on sharding and proof of stake, but I had my own focus at that time, and it's like, I'll keep my eye on you,

but, you know, good luck, young man. But then in 2015, I found myself in Toronto working in my first real Susan Tye job. I joined TD Securities to help them with, with agile DevOps and cloud adoption. And I took the opportunity to go to meetups there, went along to DeCentral, met Jeff Coleman, who was doing Techno Crypto,

met up with Anthony DiOrio, went to DeckTech at Mars, and Paul Pashos's, they're in meetup there, and, you know, it was just very evident to me. You know, they've done it. You know, we're about to launch Mainnet, and this thing is for real.

and I could not get involved, you know, prior to learning about blockchain, I think like many others, had a real sort of journey of, well, what's happening with this financial crisis and how does money work and the elites and, you know, what on earth is happening to the world, you know, are we powerless pawns? I really, you know, for me, blockchain was, you know, this real opportunity. Well, wow, we can, you know, we can pull the controls back around to our side of it. And, you know, I'm a developer. I can help. You know, I can actually, you know, I can actually do a positive, proactive thing to try and move things towards this new paradigm. So that's what I did. I mean, you know, I guess the analogy in my head was, you know, if you had met Linus Torvalds and he said, you know, I'm doing this, this Linux thing, you know, it's just for fun. You know, hey, Bob, you know, you know, C++. Can you help a bit? You know, would that have been a good thing to do? Would that have been, fun, whether or not it worked out. So that's what I did with Ethereum is I just got involved.

You know, really with thought that, you know, maybe that can turn into some job later, maybe that will be some paid work. Maybe I can find something at some startup doing something. But instead it turned into, you know, sort of ushered into the inner sanctum. Because in late 2015 when the foundation was, you know, nearly. running out of money and Gavin, the C++ team kind of moved out and formed parity. The project that I set myself as a starter, which was actually seeing, can I get Ethereum running on a smart watch? I was building on top of that code base and the team went away.

So I went in and helped. And I was the only person in the world that did. So then I got hired. And off we went. at some level sort of demonstrates the power of following what you think is cool and scratch your own edge right

yeah because like I think this seems to have happened twice in your career like you scratched your age with gaming early on without a financial model per se and then you did it with Ethereum and both have worked out quite well for you

yeah and I mean I really hope that when we are more in the new network paradigm, that more people get the opportunity to do that. Because I think that just both fear and just financial constraints just stop so many people from doing things that they love, that they really care about. So many people just get stuck in a, well, that's a good enough. If I do that job, you know, it won't drive me completely insane and I can have fun of them, you know, in my spare time.

But, you know, basically end up doing 30, 40 years of stuff that they don't really care about that much. Yeah. And then you switch to consensus and worked with the Enterprise Ethereum Alliance, right? What were you doing there? Well, I mean, that story actually started a little earlier, which was when I had joined the foundation, really, you know, working on that C++ client and really helping to sort of reboot that team,

you know, after the departure of the original development team. The other thing that popped up in that period was was Hyperledger. So I was going to the O'Reilly OSCON conference in May 2016. I just wanted to go to the conference. And just before that, you know, Hyper Ledger had been announced. And I mean, my first reaction was, oh, my God, it's like your dad's turned up at the dance club, you know. You're down the disco and your dad's come. Oh, my God.

This is so embarrassing. You know, like, you know, they're trying to play it being cool. This is going to be so terrible. You know, like, what's enterprise blockchain going to be? Like, it's, oh, my God. Anyway, that, that, I see in respect, in, in retrospect, that, that was over cynical. You know, there are a lot of a fantastically talented people. in in in these in these enterprises as well but but heading into that um i spotted that consensus were

part of um of hyperledger and i was like well what's going on there you know i thought consensus were totally uh ethereum you know what why are they in them why are they in this and what is hyperledger anyway you know you've got you've got ibn you've got intel uh you know you've got digital assets holdings, you know, and it's like everyone's sort of throwing their tech in a heap and like are they trying to pick a winner or like what, like what is this thing? What's going on? So I started lurking on the slack and, you know, trying to try to see what was going on there and then ended up talking to Joseph Chow and then Andrew Keyes and then Joe Lubin about, you know, what do you think is going on with Hiveledger? What does consensus, what, what does consensus

want of this. And that was really quite simple was, well, we want to get an Ethereum

code base in there. You know, we, we think that, you know, Ethereum is a, is a great technology for enterprise.

You know, the consensus had their large consulting, you know, consensus enterprise arm for a good amount of time and it was,

and it was getting real traction. And, you know, they rightly thought that Ethereum should be part of that. But the real barriers to that were licensing, were finding an Apache 2 permissively licensed code base that

could go in. And I said, well, I think CPP Ethereum is, is MIT licensed. And it turned out not quite to be true. There had been an earlier effort at relicensing. But I picked that up again. You know, when I did go down to OSCON, I set up an open source blockchain meetup, invited all the Bitcoin meetup, the Ethereum meetup, the blockchain for business meetup, people from the IBM lab there, you know, from tendermint, from factum, from the conference, and had a really great kind of meeting. I later did a blog post called Cats and Dogs Can Be Frills. friends. And I got to meet Brian Belendorf there as well, who was announced as the executive director at OssCon the following morning.

And yeah, really, I started a great friendship with Brian and with Chris Ferris, you know, who's the Fabric lead at that point, really looking to see if we could bridge those communities. So I was working towards re-licensing of that CPP Ethereum client to see, could we get to this wonderful place of saying, okay you're you're concerned with public Ethereum great talk to the Ethereum Foundation if you want to do enterprise stuff fantastic talk to our partners at the Linux Foundation you know who've done hundreds and hundreds of these collaboration projects and they can help you that that that relicensing effort failed that that was not approved by by by parity by by Gavin Wood talked to a fair bit about that we're reconciled and

happy now, but it was a real kind of blow to me at the time. And really, that's where the EEA came from was the failure of that initial bridging effort. And really that Joe offered me, you know, sort of a second vice at that cherry of saying, well, you know, the Grand Union failed, but we have enough enterprise Ethereum people that we can get together our own consortium. And maybe we can move quicker because we're all on the same tech base. But really, the aim just saying, well, what does it take to get to production red? You know, from where we are with public Ethereum, what does it take to get to, you know, a product that you can stand up in the market, you know, against order, against, you know,

the IBM blockchain offering and saying, you know, here's a, you know, enterprise grade, ready to go, their own clients. So, yeah, I worked on that for a year between October 2016. and on October 2017, that launching in February of 2017. I was the vice chair of the technical steering committee. The aim there, just getting together enterprises and startups and saying, well, hey, what can we build? What do you need? How do you get to done?

That's a fascinating story on how you came to your current role with Sweetbridge. And I agree. I mean, I think that for Ethereum to succeed over the long term, it does need, you know, it does need to have a solid public network, but it also needs to have a product that can be sold to enterprise that is production ready, as you said. So moving on to Sweetbridge, you know, perhaps a good way to start is to quote the CEO of Sweetbridge. I was watching talks earlier. So one of the great things about Sweetbridge is you guys published these talks on YouTube. There's a few out. We'll link to them in the show notes.

But Scott Nelson said that Sweetbridge is a series of protocols over multiple years that will bring liquidity in all forms to capital assets and talents within supply chains. So could you help us unpack that statement? What is it that he means here? I mean, the reason I moved to Sweetbridge was not unhappiness at Consensus and EAA, but really seeing a bigger and a more impactful mission, which was really making, you know, the promise of blockchain technology for social impact and change on the world, you know, come to reality.

You know, I ended up at Sweetbridge on the record. of Vinay Gupta, he actually referred me, recommended me. And when I started talking to them, you know, I really realized, well, you know, again, I can't not do it. Sorry, I'm jumping again, you know, sort of into, you know, into the void a little bit. But really, you know, I am compelled to act yet again because you know, when you look at what you have going on with public blockchain, you know, even with, you know, wherever that is now, whatever the market cap of all of those are, what is it, 3, 320 billion, something like that. You know, that blockchain is small compared to traditional financing and financing is small compared to supply chain.

Because really, supply chain is it's two-thirds of the world's economy, $54 trillion a year, touching the lives of three billion people. Because it's everything physical. You know, it's, you know, getting away from your little geeker sphere on the computers, you know, that there's actually people in the world doing physical things, moving things around. I think a good way to look at it is if it's anything that you didn't grow or produce your yourself, it came from a supply chain. So like unless you're picking your tomatoes from your garden and you're carving out your own

furniture from trees that grow in your backyard, if it's a product that you own or consume, it's coming from a supply chain. And that's essentially everything in their lives, right? Well, yeah. Well, it's civilization. I guess, you know, we used to live in huts and you would do all your stuff and cut your own wood and, you know, growing your own food and so on. But we're way past that.

And, you know, the reality is that most people are utterly, utterly dependent on other people for nearly all of the goods and services that make up their lives. And that interrelationship is a good thing. You know, that allows you to specialize and to have, you know, vast economies. But, yeah, you know, supply chains are probably an area that's benefited, is the least from technical innovation. You know, they really are, you know, here's your clipboard with your paper things and filling in your stuff and so on.

Though, I mean, you say supply chain, but you could really say commerce or business, really, it's almost that broad, physical business, you know, anything which is not purely digital. And I mean, I guess, in our profession, we get used to being so digitally native that you don't think about that stuff, but, you know, most people on the planet are absolutely not. You know, it is around physical things and retail and shipping and so on. So, you know, there's just really huge, huge impact that you can have by applying this technology to that area. Because it's huge.

And so can you expand on what he means when he says that it will bring liquidity? So how does Sweetbridge bring liquidity into global commerce and perhaps explain why global commerce isn't liquid? For sure, yeah. Well, so I mean, really the reason for that is that unlike in your personal life where you just buy things pay for them the majority of business transactions are here I make an order somebody you know supplies the the goods or services for that order and then they send an invoice and then they're paid later so there is this this trade financing gap where you know that's fantastic that I have an order of a you know a million tons of coffee beans from you know from

Starbucks or what have you, but you've got to go and like find the money for that somewhere. And then, you know, that, that, that, that carries on down the chain that, that, the, the, the big corporations that are at the top of the supply chain have, uh, incredible access to credit. You know, large companies can very easily, you know, do new bond issuings or whatever or just, just lend money at a great interest rates. But as you go out and out towards the edges of these networks and especially into developing markets, you don't have that access to credit. So, you know, the World Bank says that, you know, the number one barrier to world trade is

systemic lack of access to credit, you know, that large, you know, the assumptions that we have, I guess, as consumers even in the West of, well, of course I can get a credit card, of course I can get a mortgage, of course I could get a business loan, you know, maybe the terms aren't going to be what I would like, but, you know, it's going to be okay as long as my credit's sort of all right. I'm going to get access to that. You know, that I will be able to start a business. You know, I can get, you know, lend some money to get my orders in and then I'll get paid later.

But that's a complete blocker to a lot of the world, you know, that people are reliant on loan sharks to get the smallest amounts of money. You know, this is why microfinancing has been so impactful. is you know we're not necessarily talking about a lot of money that people need to just start something they just don't have a hundred bucks or whatever to go down the warehouse to get a pallet of something so what that what Scott's talking about with liquidity solution is that we we have a real fantastic opportunity with blockchain of being able to take existing assets that people do have have and essentially locking those up, you know, tokenizing those and locking them up on chain. And then what you can do is that you can borrow against those, but without needing a

counterparty. That's the key difference of the proposition of Sweetbridge is this idea of being able to lend yourself money but secured on assets which you already have. So stepping away from that sort of usury, well, you know, if you want access to credit, you know, you have to give me title on your house and, you know, basically that people are taking their cut because they have access to credit, but you don't. So they basically borrow you, you know, they, sorry, they lend you either their own money or credit that they have access to and you will pay for that. you know so in the worst case that's that's loan sharking or payday loans and so on and even in in what we would consider as the best cases say in the west of well great i can have a mortgage and i can buy a house isn't that brilliant well not really because they take hundreds of thousands

of dollars worth of interest away from you and i mean it's over a long term so you don't notice it so much but you know that's that's how the financial world has become is is really, you know, certain institutions or individuals have easy access to credit, and they lend that out and they just accumulate all the money. Can you explain how one can lend himself or herself money? Like how, walk us through how, so let's, for instance, say I have, like, maybe the simplest example, I have land. and I want to borrow money against that land. Walk us through how this works

because there's something that I'm not clear here. Like who's lending the money and what interest, you know, would, and who's benefiting from this? So, I mean, essentially who's lending it is nobody is lending it. You are minting it. And I mean, that's how Fiat works.

is, you know, a central bank or the commercial banks, you know, through the rights that they have, through the central bank, you know, they create new money. That's how lending works, is money is magiced out of thin air and is lent to you at interest. But what's been different is that's been an ability which only, you know, sovereign nations have been able to do. but with with blockchain anyone can mint tokens anyone can mint you new currency so that's how it works with tweet bridge is that you you have a real asset behind it you know so it isn't it isn't funny money uh you know it's not completely made up you know there is a there is a real world asset that's sitting behind it and you're not you're not actually um you know you're

not doing a fractional reserve kind of 10 times lend or what have you You know, you have a real asset behind that, but you are minting new coins and those are bridge coins. And there will be repayment terms. If you don't make your repayment terms, then your asset will be pulled away from you. But not by a bank, but into the network, you know, that ownership will be taken into the network. And then, you know, there will be some resale mechanism. But yeah, you are essentially you are minting new coins. There you go.

You can exit that value to US dollars and do something with it. But, you know, when you repay it, well, that closes the thing off. And out of that, you can close the thing off. I mean, you know, and that's something that can never happen with fractional reserve. You know, sovereign debt can never be repaid, right? because you've got interest on top of that lending and where's that interest coming from? Well, nowhere, it can't come from anywhere. Where the setup we have on sweet bridges is that those bridge coins can be closed back off again.

And the interest that you have paid is really just, it's just paying for, you know, the cost of that machine of the network being there. So essentially, like, from a user experience perspective, if I have ESER, you can imagine this sweet bridge system, the early systems that you are building is I can sort of deposit my ESER. Correct. And if I deposit a thousand dollars worth of ether, what is it like? Two Ether now. So if I deposit two ESER was $1,000 into the smart contract, I'm going to get,

$1,000 worth of bridge coin? Well, it won't be that much, no, because what you would be doing at that point is you'd be having a hundred percent loan, so, you know, you, depending on the asset class, there's only going to be a certain amount that you can

lend against it. I mean, you know, I guess the dynamics there are very similar to margin lending. You know, you don't want to leverage yourself up too much or if the asset value drops, you're going to get margin called and you're going to lose your money. So I'm not sure exactly what ratios there are going to end up being. But yeah, the initial product will have ether and Bitcoin in the wallet and you will be able to borrow against that to a certain ratio.

And then the scenario really is that you, you know, you do have, you know, a sell line and you know, if you hit the cell line, then, yeah, you know, you're going to. you're going to get partially liquidated or you can fund it up before you get close to it. I don't know if there's going to be some waiting time. But yeah, essentially, you know, you are having a margin lend against

that crypto asset and don't leverage yourself up too much because it is fungible and will sell. So it could be I lock I lock to ESER and I get let's say $500, $500 worth of bridge

coin out. And now the question is, what is bridge coin, right? What is this thing I'm getting $500 worth of? Well, you're getting something that you can exchange for US dollars that is essentially like a US dollar stable coin,

though not stable coin in the same synthetic way as pretty much all of the other stable coins that there are in that this is an asset-backed asset. So what you can do that is You can exit that out to Fiat

Or you can keep it and hold it So you know the other the other piece Which this liquidity layer is all for is really is for building these You know these supply chain ecosystems on top of it is really building What's been described as an overlay world economy In that native cryptocurrencies are not really suitable for trade because of both the deflationary aspect, you know, the hoddling, that they are, you know, they're not, they're not designed to be used. You want to hold on to them. They're valuable. But also just the volatility, you know, signing a contract saying, well, in one year, I will give you one Bitcoin for this service is just a massive currency risk. Like, I've no idea what that's actually going to be. So it's really not suitable for signing business. contracts in cryptocurrency, it's just too much of a volatility risk. But if you have something

which is essentially pegged to US dollar, euro, that's workable. So there will be multiple bridge coins. That's the other thing to say is everything that we've been talking about so far has really been focusing on US dollar, but there will be multiple bridge coin, you know, fiat. So this in principle is not too different from the thing that was attempted by bit shares. Like the bit shares created the bitUSD and the bit CNY. It had exactly the same mechanism. And then later on Maker Dow came on the scene in a big way. And they have exactly the same mechanism except they add a certain feature on top,

which is that should a lot of default, faults in the system happens. So it's like people came in and locked ether and got bridge coin out. And if ether falls down radically, it falls down a lot, then they have this other piece, which is the MKR share. The shareholders would bail out the system essentially and re-collateralize it. So like the liquidity part of Sweet Bridge appears to be similar to BitShare's BitUSD and similar to MakerDA but minus this kind of insurance system

So yeah I mean Maker are I guess a sister brother sibling project with Sweetbridge So Kenny Kenny Roe is an advisor to

Sweepbridge as well who was there at Maker our chain as well. I met with both the DAP Hub and MakerDAO teams in Cancun at DevCon3. The Sweetbridge tokens are built on DAP Hub code. You know, we, you know, we don't have a formal partnership, but kind of could. I'd like to. We've just both been busy. You know, because I think that you know there's a lot of similarities but yeah just a just a different economic model really in that the initial building on top of ether bitcoin piece of sweepbridge it is similar to existing

things but it's part of a much much broader vision where it's really just getting the you know getting the pipes lined up with the simple case I mean, another key advisor for Sweetbridge is Vinay Gupta in that his Materium project, the legally enforceable smart contract, is a fundamental building block for, you know, all of the more interesting parts of Sweetbridge, which is really bringing off-chain assets into the pattern, which is, I mean, that's really where you're going to get the stability is is not by trying to get to stability synthetically, but by having a broad set of real world assets,

which are stable, like real estate, like factoring of invoices, like lending against stock, you know, or basically anything. You know, really the ultimate vision is all the assets in the world should come on chain. and that's really how you have stability. So the idea here is, okay,

it is easy to imagine me locking up to ether and getting $500 worth of bridge coin out, right? Like all of the primitives for this transaction are already built. But what Sweet Bridge would ultimately want to enable is, I don't have ether. I have something that is, let's say, quote-unquote a real world claim on something else. So the example could be,

by the way, like I've actually worked in supply chain for most of my professional life. All right. You're going to school me then? No, no, no. There's nothing to school, really. Like, I'm pretty familiar with this problem.

So the problem is like this. So I used to work in the vaccines industry, supply chain. And the issue is this. So the Mexican government, let's say the Mexican government wants to buy 200,000 doses of vaccines. And that 200,000 doses of vaccines, they're going to cost $20 million. We're going to ship them the vaccines. And all we get from the Mexican government is just a paper that says,

we're going to pay you $20 million 60 days later. That's it. That's the paper we have. We don't have money in the bank account. So we have all of these papers from our, all of our customers essentially. But on the other side, to actually manufacture the vaccine, we need to buy stuff.

And when we go and want to buy stuff, there are some places where you can buy stuff and you can tell them, oh, we will pay you 60 days later, because that's when our customers will pay us. But then there are other places where this just does not work. So you have to give them money immediately, Whereas the money that you're going to get will come 60 days later. So there's this mismatch.

So ultimately, like what a big company, like, no artist needs is, hey, somebody, take these pieces of paper from me, but give me actual dollars on my bank account today. So I'm going to receive $20 million in 60 days, but take this piece of paper and give me $18 million today. Because I'll use that $18 million to buy other things. And this is a very practical bread and butter problem. And so the idea here, what seems to me is you want to allow that kind of transaction to happen on chain. So the simpler transaction is lock ether, get bridge coin out. But then the more complex transaction you want is here's Novartis that locks $20 million worth of this paper that somebody will pay us in 60 days.

They can lock that in and they can get bridge coin out. This is ultimately what you want to enable. Yes. Yeah. And I mean the, so what Materium is doing and how that is fundamental is beyond assets which are already on chain, there's a huge amount that we can do with with this, this legal bridge mechanism of saying, well, in 150 jurisdictions around the world, you, two parties to an agreement, can agree to legally binding arbitration in case of a dispute.

This is a thing called the New York Accords that was signed in the 1950s, really to facilitate world trade, and really, I guess, came out of maritime law. You know, if a ship goes down in the middle of the ocean in international waters, what do you do? You know, who pays for it? Who gets what? How does that happen?

And the answer is arbitration, you know, that that would go to some maritime lawyers who will look at what the contract was signed and will come to some determination, and then that will be, you know, legally enforced. And that mechanism is the intended mechanism for making smart contracts legally enforceable through Materium is saying, well, when you sign a legal agreement between two companies or whatever, doing something, you are going to sign a real world contract in a given jurisdiction according to their local law. You are going to have a real world big name law firm who are going to write that digital version of that for a given asset class. You know, sort of as a template, you know, fill in the names and details and so on.

You are going to digitally sign that and hash it and anchor it and there you go. that would those lawyers they would be paired with smart contract authors who are writing the smart contract you know really implementation of like well what's the flow chart what the state's this thing can go through you know if this and two of you signed that and then it's in this state and if it fails it can come out and that you're really you know you're digitizing a contract but you also agree to arbitration in case of dispute and what that means is so say that contract is you know is this kind of factoring you know agreement yes we agree we'll we'll pay it and so on you have

something there which which is legally enforceable you know in in case of dispute there you can take that to the arbitrators and they will take that to the local court and the court will rubber stamp it and no you you own these yeah oh that was the house yet you you tokenized your house but yeah that that really was a real token you know someone can't say oh that was just silly internet money thing you know i'm not i'm not leaving my home well yeah you are because you you signed an agreement and that's legally enforceable and i mean like anything else like you know most things never ever get to court but the fact that you have got that

you know the the the force of the state at the end of the line that gives you the the confidence of businesses to be happy to sign a, you know, a smart contractor, a digital signature of a legal text and feel, you know, secure in doing that. So really, you, we've got to the paperless office. You know, it's happened. We can actually have these things, you know, on the computers. We have enough of that digital infrastructure plus enough of a tie to the real world law that you can do commerce on computers.

And I mean, it's no different really to something like doc your sign. You know, it's just taking the thing a step beyond plus using smart contracts for enforcing the actual logic. So yeah, that material bridge should then let you augment things which are already on chain with nearly everything which is jurisdictionally bound can be done using that pattern. A third area that we haven't got in scope, but I think we probably should at some point is more like what Oracle eyes are doing, where you have things which are sort of like physical bearer assets, you know, the idea of having, you know, a Rolex watch, a bar of gold or something

with a cryptographic seal on it, you know, you can do proof of possession. You know, I think that's another category. Another category again is that legal bridge is assuming that you're living somewhere where you have the rule of law and having title to a house, you know, is going to work. if you're in Somalia doesn't really matter possessions nine-tenths to the law at that point but I think all three of those are

are going to have roles to bring things on chain and really bringing them on chain is just getting them in a malleable form right where they're on the computers and you can do stuff faster yeah so I sort of understand the vision I personally have I have concerns about the stability of the bridge coin,

but we won't go into it because you mentioned that you personally are not in the economic side of it, but actually in the building infrastructure side of it. Yeah. So the people to talk to there are Michael Zagreb, sorry, Zagam, and Alex Balkan, a coin fund, and Scott Nelson and David Henderson, the CFO. They've done a lot of thinking.

It's just not in my head. Okay, okay. But I do get the value proposition of this approach. So the value proposition to me is very clear because last year I invested in a startup in India. The problem that this startup solves, like wants to solve, is essentially the problem of supply chain liquidity. right so what they're doing is they're working in the construction industry so so in the construction industry like imagine like I'm a builder right I have to build this whole building right and then I have customers to which I will sell like flats in this

building but in actually in order to build this building I need like cement I need like steel I need all of these raw materials so generally what ends up happening is the builder gets these raw materials and then promises to pay 60 days later, that same thing. Now that creates a lot of strain on the company that is making the cement, right? Like it has shipped all the cement out where it's not going to get this money anytime soon. So the interesting bit here is, so the cement company essentially has these papers from builders that they will pay them 60 days later and they want to sell this paper and get actual money, actually dollars very quickly.

It's the same Novartis problem. It's the same as the builder problem in India. It's the same. But what is striking is, Novartis is usually able to sell these papers at a discount of 2%. So if Noirtis is expecting $20 million out, they'll say, hey, we'll give you a discount of 3%.

But take these papers and give us the money. But like that same cement company in India, will need to offer a discount of 25% in order to get the papers of their hands. And that's the difference between a developed economy and a developing economy. So what this translates into is there's many businesses that can work in a developed economy but will not work in a developing economy because that cost, the haircut you have to admit is just so big. And the interesting bit about Sweetbridge and these approaches is

we are potentially bringing a global pool of liquidity to bear on this problem. So no matter where that person is from, here's this global system that is going to bring this liquidity to any company that has this particular problem. So maybe ultimately it's going to make this kind of financing cheaper for all firms in the world, rather than

have this unequal distribution that companies in some countries have it easier and in others they don't. Absolutely. I mean, and that was something that hugely appealed to me is really you know, it's about level playing field. Is

you know the existing world economic system, you know, it's effectively economic colonialism you know, continued that there is you know this systemic economic

suppression which means you just can't get out of it you know you're carrying a giant load on your back and it just negatively impacts the whole of humanity you know it's it's you know we

it's quite obscene with the you know with all of the affluence and and resourcing that there in the world, you know, that people are, you know, living in fear, you know, that you have, you know, starvation, homelessness, lack of access to, you know, to education and healthcare. When, you know, we're living in a world of abundance. It's just incredibly poorly distributed. And really, that's by design, obviously. So let's not do that.

that we really have an opportunity, I think, with, with, with blockchain to, to build a fairer and better system for everyone. So let's move on to, so we've spent quite a bit of time spending on the, on the liquidity aspect of a sweet bridge. But there are other components to this, to this protocol. I think it's safe to say that the liquidity part of the protocol is, is the, perhaps the most important, but let's spend a little bit of time on the other components. Can you describe very briefly sort of the other layers and what role they play? Yeah, for sure. So, you know, I guess the big thing to say about Sweetbridge as a whole is that Sweetbridge itself is not looking to build any products. it's looking to build protocols and alliances, ecosystems for all sorts of things to arise on top.

The background of most of the founders of Sweepbridge is deep, deep experience in supply chains, financing, settlement, you know, basically the facilitating. the process of giant amounts of contracts and invoices for major supply chains. And something that Scott Nelson was saying that CEO was that he's been doing smart contracts for 10 years. But without blockchains, it was really automation of contracts, digitization of contracts and verification that these contract terms are being met. and people are being paid and the thing is being settled out. So while, you know, the majority of the focus is on this liquidity piece, it's really because you need that to get to the next bit,

which are, you know, really the wheelhouse of the principles of the founders of Sweetbridge, which is really these settlement and supply chain piece. But you need that stable, you know, base to be able to get to those. So really the next layer there is settlement here, which is really, well, if you have that economic basis, what you can have is you can have a series of companies which are basically agreeing to, you know, to interact with each other in, in the economic basis, you know, in the in Bridgecoin, you know, that they are all living in that overlay world economy of a more liquid but stable currency where you can make contracts with each other on that basis. So the alliance, the Sweet Bridge Alliance, is a group of partner companies within this.

sort of growing ecosystem who are basically looking to dog food and live within this new paradigm and starting with the liquidity protocol but building up from that. So yeah, the second layer protocol, though really the idea of layers implies that, you know, you have a single linear set of stages you're going through, which is also not the case. You know, Sweetbridge are encouraging others to build on top. But, you know, build your own layers. There's no magic answer here. The web of world trade is probably one of the most complex systems there is and really you're talking about business process automation and it's going to be a very heterogeneous setup. And that really starts to manifest in terms of

blockchain technology at that settlement layer in that liquidity as we have it right now is Ethereum mainnet, but when you get up to that settlement layer and you start getting to actual supply chain technologies, you know, that's where we start working with fabric, fabric composer, probably Corder and probably any other blockchain tech that needs to get plugged in. And also non-block chain ones as well. You know, there will be SaaS legacy things which are going to have value from connecting into liquidity or connecting into settlement where settlement is really saying well hey here is a here is a web of of these contracts which have been agreed uh who's going to pay who and when does that happen and how does that happen you know that that is both a mixture of something

that you can have on a per smart contract basis but some of those are perhaps you know outside of that, you know, if you have this web of suppliers, well, who gets paid first? If somebody has not paid their suppliers and they have some money coming in, well, does it go to them or does it go around them? You know, where does that happen? That, you know, that is a common problem as well in supply chains is that you get dragged down by your partners. You know, you have a situation where somebody owes you for something and they haven't paid it yet, are you going to stop supplying them? Because if you stop supplying them, that might kill them even more and that might mean

you'd never get the money. So this is a very common problem, is your business partners end up having problems and they drag down their others with them. But that's something again where you model the thing as a network on you know, with more, you know, more free market pieces, you can, you can probably start, you know, decoupling things quite significantly. You're not necessarily having to do, you know, hey, you're my only supplier for this and I'm going to sign a, you know, three-year exclusive deal with you. Well, no, like, I'm just going to get things from wherever, whoever can supply them.

You know, you can end up with a lot more fluid kind of network and really hopefully isolate some of that damage a lot more where, okay, you're going down, you know, you haven't paid your suppliers. Well, maybe the money gets routed around you. You know, maybe the network just routes, routes around it, right? You've got an internet round around the damage kind of, you know, analogy going on in these financial networks as well. Hopefully isolate the damage more than it has been the case traditionally where you have got very, very rigid, you know, painful. relationships. Cool.

So the Sweet Bridge project is doing an ICO as well, right? So tell us about the ICO and what is the token that is being offered for sale. Yeah. So the crown sale that we have ongoing has been running since December. It's going through different phases, different, different, different tranches and what's being sold is sweet coin so that there are there are two tokens in in the economic model there is bridge coin which is this stable coin that really there's multiple bridge coins you know you can have bridge coin u.s u.s dollars bridge coin euro so on and the second

token is sweet coin which is a discount token model now a discount token model is really very, very interesting and a little different to a utility token in that the economics of a discount model are really, really aligning incentives in that the value that you have from a discount token is using it. You know, if you use these discount tokens, well, you get discounts. If you don't use them, then you don't. You know, so hoddling, gift cards is a bit stupid. You know, you can, but really you're not well served to do that. So both the quite heavy sort of KYC, manual KYC process we have,

together with that discount token model, discount token model have really made Sweetbridge really quite different to an awful lot of the other projects out there, in that we are really quite repellent to speculators, which is great because that's not what we're looking for. We're not about self-enrichment. We're about building a better world and building a better economic model. And really, the people that we're looking for to buy sweet coin

are people who want to use sweet coin, who want to, you know, use that liquidity model or do their own, you know, crowdfunding. That's another thing that we have is that the platform that we've built, you know, is being offered again as a sort of, you know, crowd sale and a box kind of solution to, you know, to companies in the Sweet Bridge Alliance. or who want to join that, who see value in that in that discount token model, which is really on the basis, it's on a, it's on a, so Scott was telling me it's a, the valuation is on a, on a five-year sort of basis that you, you know,

using your discounts over that term should be a, should be sort of a wash. So yeah, really the model is that, you know, anyone can use the protocols. you know, at a low interest rate that will depend on the asset class, don't have exact numbers, it's going to vary by country as well. But then you can apply these tokens to reduce your rates all the way down to zero. You know, so you can have interest-free lending. The other thing there as well is that we are looking to set up our own Fiat gateways. so you could also get, you know, fee-free fiat exchange if you do want to exit it.

Okay, cool. So with regards to how you'll be launching this, so how will people be able to use this this platform at the beginning? So what is sort of your go-to-market strategy? How will you launch? Yeah, so the initial product. which was slated for Q1, but there's only two weeks left, so maybe that isn't happening, was, well, or is, that we will have a mobile app, which is your wallet,

and that you can deposit Bitcoin and ether in that, and that you can lend against those, that you can mint bridge coin. That is the initial MVP. The sweet coin has been minted. That happened in January. Some people who were in the earlier rounds of the sale, you know, have requested that that be, you know, sent to their own wallets.

You know, they want to keep on a ledger or what have you. They are both, sweet coin and bridge coin are EAC 20 compatible tokens so you can do that if you want but the thing is that moving it outside in that way has basically

un-KYCed it it's you know it's taking it out so you know those tokens as they are pretty pretty worthless in that secondary state you know we are not looking to go to exchanges we're not looking to list

I guess the you know there's a risk that can have a rogue exchange, just choosing to do that anyway. But those un-KYC tokens, they can't be used for their purpose. You know, you can't use the discount token unless you're inside the system. So really, again, that's another repel speculators kind of approach. You know, you could sell or gift those tokens to somebody who would, go through that process again, you know, who had been KYC'd and could show, hey, I have acquired more tokens. Can I, you know, get these blessed back in?

But, you know, that's, that's, you know, again, a slow manual process. So really, the aim is, is to build, you know, a closed ecosystem. That's closed to people within, you know, within that alliance. within the customer base, you know, not to, it's not a company silo, it's a project silo, a community silo. And that really those where you do have bridges to Fiat, that that will be done by creation of new, of legal entities to do that in a, you know, in a regulatory, compliant way. So really not looking to have any speculative elements in any of this. That would really be a novel approach to launching a coin, I'd say, if you'd manage to pull that off.

Well, thank you so much for coming on the show today. Bob, it was great to talk about Street Bridge and looking forward to seeing how this vision gets rolled out. I mean, because it is quite a grand vision, as our listeners will probably have understood should after this interview. So thank you so much and we'll look forward to seeing how Sweet Bridge will evolve. No worries. And I would thoroughly recommend that everyone have a look at. There is a fantastic video of Scott Nelson and Benegutte chewing through all of this stuff.

It's an hour and 40 minutes long. It's an absolute epic, you know, head-to-head meeting of the minds, really talking through an awful lot of this. Yeah, I watched that, I mean, I watched part of it earlier because it's quite long, but as I said, you guys put out these sort of thought videos out of them, that sort of talks, I guess, which are very interesting in where you go in depth into some of all, some of these issues with sort of the economics, but also the technical aspect. So we'll link to those in the show notes.

Yeah, I mean, tons of videos, tons of blog posts. And, yeah, lots of depth. I mean, another thing that really appealed to me in the first place is that some of the very first public releases from Sweetbridge were a series of blog posts on core values and core beliefs. You know, that really this is a, you know, a really deeply ethical, you know, big vision thing. And that was really very unique to me. And I resist. Great. Well, thanks again.

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