The Wolf Of All Streets - 1.7 Billion People Are Unbanked. Crypto Fixes This. | Staci Warden, Algorand

Episode Date: July 24, 2022

How do you fix the fraud problems of disaster relief and remittance programs? By bringing payments onto the Algorand blockchain. So the next time your living room floods, you can receive reliable emergency relief funds immediately. Staci Warden, CEO of Algorand, is on a mission to make the world a better place by helping both banked and unbanked people across the entire globe. She knows that crypto is so much more than the metaverse and NFTs, and is playing a vital role in making sure we solve important real-world problems. She joins me on the show to talk about how we thread the needle between crypto and our legacy systems, tokenization, the industry’s North Star, and several exciting projects on the horizon at Algorand. JOIN THE FREE WOLF DEN NEWSLETTER 📩 https://www.getrevue.co/profile/TheWolfDen EPISODE LINKS Staci Warden: https://twitter.com/StaciW_DC Production & Marketing Team: https://penname.co/ FOLLOW SCOTT MELKER • Twitter: https://twitter.com/scottmelker • Facebook: https://www.facebook.com/wolfofallstreets • Web: https://www.thewolfofallstreets.io • Spotify: https://spoti.fi/30N5FDe • Apple Podcasts: https://apple.co/3FASB2c

But you know, also, there's so many real world problems to solve, right? You know, our North Star is financial inclusion. Do you know there's go. It's inevitable for blockchain to work at scale that we're going to live in a multi-chain world. One of the most popular and exciting layer ones is Algorand, and I had the opportunity to speak with their CEO, Stacey Warden. Now she talked about how they've been largely the adults in the room.

Now we hear about DeFi, NFTs, Metaverse, all the obvious use cases, but she went into some use cases you will not believe, things that are happening on the ground to help the unbanked and underbanked all over the world that are being built on Algorand, which she believes can be the settlement layer for the entire planet. Listen, I believe that we are going to live in a multi-chain world and that it's very unlikely that one single chain is going to be able to scale to mass adoption. 100%. Right. So where does Algorand fit into that? Actually, I think in the sort of reductio ad absurdum version of this, in a pure multi-chain world, everything could settle on Algorand. I mean, you can be in your ecosystem. You like the food in your ecosystem. You like the vibe.

You know, this is all about vibe capitalism too in crypto, right? But why wouldn't you settle on the ecosystem that settles with finality in 4.5 seconds and has transaction fees sub penny and has a low carbon footprint? So I think, you know, and these are the kinds of things that we're driving towards. EVM to AVM compatibility, state proofs, which I can talk about, which is a way to take a picture of the Algorand blockchain so that you can use a trustless bridge, a bridge that's just a smart contract to other ecosystems. And so we believe in a multi-chain world and we're ready for it. So you could be the settlement layer below all of that. You know, it could be, yeah. And how do we inevitably bridge them all together

and make it interoperable in a system like that? So the way I think about it is in three kind of pipes. One is that developers, Solidity-type developers, they need to learn the Algorand programming language, which is PyTeal. So we have a lot of engagement out there for developers to teach them PyTeal, hackathons, and all kinds of incubators for developers,

just sort of have them learn the language of Algorand. Number two, we need liquidity to port back and forth between ecosystems, right? And they are the we, and when I say we, I mean the brainiacs at Algorand Inc, right? They're building this thing called StateProofs, and StateProofs allows another chain to take a picture of the state of affairs on the Algorand blockchain and teleport that.

That's a technical term, by the way. Teleport that state of affairs. I wish they could do that for us. Yeah, that's coming next. They're very smart at Algorand. But via a smart contract, not via a consensus bridge, right? So you just kind of take the picture of the state of affairs on Algorand, and you can via smart contract only understand what's going on in Algorand.

And we do this every 15 minutes with StatePriest. This will go live this summer. So that's the second channel that is really important to kind of multi-channel. And then the third one is EVM to AVM compatibility. And that is where your app that you like in your ecosystem can execute on the Algorand blockchain. And so we think about it in these three ways. And yeah, we believe in a multi-chain world and we're ready for it. And we believe that we are going to benefit enormously from it. Do you ever feel like you're the adults in the room? You know, we have been called the professor's coin, I will say,

you know, and we are, you know, we're more of a, you know, nice food, avocado toast kind of than a beanbag chair and jugglers kind of, you know, ecosystem, I will say. Yeah, we're, but we own it. Like they, I don't know if you were at Crypto Bahamas. I was not. I talked to Anthony Scaramucci right afterwards and he talked about you. Yeah. You know, he has a fund dedicated completely down the ground, but they had a, he had a panel of layer one blockchains, right? and it's like three guys in t-shirts and sylvia mccauley in his italian blue suit you know just schooling them frankly it was it was fun to watch i mean i think we need that right it's interesting i think there was a sentiment always in crypto

that was sort of anti-establishment of course and now as we mature and we're on the certainly on the on the block for regulators and things like that, it feels like we need some guys in nice suits who can speak the language on both sides. Yeah. But you know, also there's so many real world problems to solve, right? You know, our North Star is financial inclusion. Do you know there's 1.7 billion people in this world without access to financial services of any kind. When I grew up, I grew up in TradFi, right? I have had eight years at J.P. Morgan, three years at the NASDAQ, U.S. Treasury Department.

I have been there in a traditional financial world. And I remember we were so excited when we went from T plus three to T plus two. We took a day off of it, right? In crypto, in Algorand, we took a day off of it, right? And like, in crypto, you know, in Algorand, we settle in 4.5 seconds, right? And if you're gonna get to those 1.7 billion people in the world, the only way to do that is in a crypto blockchain environment.

You know, the way I look at innovation in finance for the last 15 years is bank balance sheets, the messaging between two bank balance sheets just got faster and faster. And just blockchain is different. It's writing to one ledger. I mean, you know this obviously, but that is revolutionary. And so, you know, when you think about those real world problems, Algorand can solve those because, you know, we're just, the scale is possible, the environmental footprint is low and the fees are sub penny, right?

So you just talked about all the places that you were before this. Yeah. What eventually was the aha moment that you made that jump? Because it sounds like you were probably pretty comfortable where you didn't really need to do this. You know, it was pretty interesting. I, you know, throughout my life, my North Star has always been financial inclusion and access to capital for small and medium businesses. So, you know, when I worked at the NASDAQ, I ran the markets for small and medium cap enterprises, right? When I was at JP Morgan, I was really focused on developing countries and getting that kind of financial services to developing countries. I've always kind of been about the little guy, you know? And, you know, the Treasury Department, I worked on debt relief for developing

countries. So my down the route, you know, we all have our down the rabbit hole stories, right? Mine was actually, I think, kind of unique because I was running programming for the press, teaching financial education to the press. And so they actually asked me, what is this Bitcoin thing? This was back in 2013. And so do you ever have something where the first, you don't know anything about it and then you have to teach it, you know, in a month? And so I was like, okay, lock yourself at home. And I emerged from my house, I like to say, you know, six days and three pizzas later, right? Just in love, like this Satoshi Nakamoto, this proof of work, like this Bitcoin. The thing though is it's a little slow.

It's got a heavy environmental footprint. It's not quite fit for purpose, right? And then, you know, I saw Ethereum and I was like, oh, programmable money. That's unbelievable. You know, a little bit not quite fit for purpose. A little bit, you know I saw a theory I'm not like a programmable money that's unbelievable you know a little bit not quite fit for purpose a little bit you know slow still and then I carried on with crypto as a side hustle when I was working for Mike Milken at the Milken Institute and then I got headhunted actually to be on the board of Algorand and when you want to be on the board of something you are you know you're giving your name you're giving your reputation

you have to help and so I did another deep dive to make sure, right? And I had that same feeling for the first time that I had with this Satoshi Nakamoto. I was like, who is this Silvio Macaulay, right? Like the elegance of the consensus mechanism, the pure proof of stake consensus mechanism, it just blew me away. And I was like, yes, I will be on that board.

And I'm just, yeah, so happy to be here. And broadly, and you probably know this yourself, the road from TradFi to crypto, it's be on that board. And I'm just, yeah, so happy to be here. And broadly, and you probably know this yourself, the road from TradFi to crypto, it's a one-way street. I mean, you turn around and like cars are coming at you, right? Like, no, there's no going back. I was talking about that, I believe, with Mark Yusko recently. It really is a one-way street, but not only for people in their employment, but even people who just have that aha moment about Bitcoin, all these skeptics, the billionaires who are dismissive of it initially, you never see them buy it. And even regardless of the price and the volatility, you never see them say, I was wrong. Maybe, maybe I shouldn't own any of this. You only see them say, my 10% is now 20.

Right. Totally. Totally. It's like this is not going away. But how do we make this work within the framework of the existing systems? We talked about there's sort of this idea that it was going to replace legacy systems. I don't believe that. I think this is a parallel rail. But with all of this regulation coming and the way that this is a threat to many of the biggest systems that exist, how do we sort of thread that needle? Yeah, I mean, you know, the way I look at it is, why is it, or an example that I like to think about is, you know, why is it that somebody in Nigeria can send somebody in Malaysia a movie over WhatsApp? A movie.

But they cannot send $1 without traveling through the correspondent banking system, clearing at the Fed, traveling back down to the correspondent banking system, and somebody's Fed, traveling back down to the correspondent banking system, and somebody's taken 12% off the top before anybody said anything, right? Seven days later. This is where I think the power of crypto and blockchain is, is that those transactions can be instantaneous

and they can be low fee. And so will it replace traditional whales? I don't think it replaced, but it is definitely going to get bigger and bigger and sitting side by side, especially on a layer one that can scale by the way, these traditional financial rails. And the more and more that you can get from a cash economy into a digital economy, it just offers things that traditional finance doesn't offer. Things like the ability to have micro payments so that

you can monetize micro things. You cannot do that now, right? The ability to have instantaneous payments, the ability to... Everybody talks about money laundering and I stand behind nobody in my disgust of the use of dirty money. But it is also possible for a woman in Afghanistan to keep hard-earned funds away from her husband and brothers and fathers, right? And the idea that you can make more liquid traditional financial assets by tokenizing them so that the little guy can participate in real

estate investment, so that the little guy can participate in bond fixed income investment. This is a wealth distribution mechanism. And so, traditional finance is a very big system, but it will get bigger and bigger and will take more and more market share, I think. Do you see a world where we tokenize everything? I mean, you just sort of described how much of a better system it obviously is. I mean, there's no reason we should also have 48-hour clearing for a stock purchase. I know. It's ridiculous. I mean, we think it's kind of cute that TradFi waits for the opening bell, right? It's like, oh, the opening bell.

You know, we're always on. We talk about it all the time, 24-7, 365 markets. Obviously, we had Sam Baikman freeze in front of the CFTC trying to explain to them why this would be better for managing risk while the farmers panicked. But there's no reason that that shouldn't exist in every other market. We should not be trying to conform back to their system. They should be moving and evolving towards ours. If you need to panic sell, which is what people do on a Saturday at 3 p.m., you shouldn't have to wait till the opening bell on Monday to your point.

Right. No, 100%. But remember how excited you were for your, I'm probably older than you are, but when you had your first PC and you got onto the internet and you could send somebody an email and it was like. And so you were so happy about that, but then you start demanding more, like why is my screen in black and white? Why can't I have a color monitor, right? Why is this so slow? And then, you know, broadband comes along and you're like, and then you're like, oh, did I just wait for my website to load for five seconds? I don't have five seconds to wait.

That kind of like raising expectations, ratcheting up, ratcheting up, ratcheting up is going to happen in finance as well. You're going to start demanding liquidity for things that you don't have liquidity for now. You're going to start demanding that you be able to exercise your views about markets immediately. You're going to start demanding immediate execution about things. This is just natural human nature. You get it, you're happy, and then you're dissatisfied and you want something better, right? Yeah. A year ago, obviously, El Salvador adopted Bitcoin as legal tender, and it seemed like it was a footnote that they also adopted your technology.

Yeah, we are the infrastructure. So the wallet sits on, it sits on. And so the, you know, in Colombia, the vaccine passport sits on Algorand. And in Nigeria now, all the IP marketplace, so for patents and copyright, you can now, you know, upload, you know, it's not built yet, but you'll be able to upload and monetize your IP in Nigeria. So we get the attention of public sector for sure. Because like to your point earlier, we're a little bit, we're the adults in the room. And we're cheap, we have very low transaction fees,

very low carbon footprint, seven houses, which we offset by smart contract, by the way, to make sure that we're carbon negative at all times. And very fast with no forking. So if you know we have this partnership with FIFA, right? Of course. So sometimes these partnerships go where the marketing department goes out and they say, hey, we put our name on the stadium and this will be great and we'll pay you some money and you do that. This actually happened the opposite way where they had a consultant.

This consultant looked around at different layer ones and they said, look, FIFA is trying to do new things, right? They're trying to think about an NFT marketplace for players. They're thinking about how they can do kind of secondary market sales, maybe player stuff. They had all of these ideas, but they're FIFA. They can't mess this up, right? They can't, like, it can't go wrong. So what layer one are they going to do? So they came to us and, you know, these are kinds of things where, you know, we get the call, I will say. So you're saying they can't

go down five times in five months for five hours at a time. I have no comment about that. I will just make the observation that we have not been down for one second since we went live. Are those growing pains that we've seen obviously with others, is that inevitable that at some point there's some sort of exploit or a hack or downtime or can this really just indefinitely work? I feel like every time I say that, we've never been down for a second, I'm tempting God. Right. It does feel that way. But I will say the things that we have sometimes been criticized for in the past, oh, you're slow or you're boring or whatever, it is true that we are very careful. Like we, you know, we just don't release things until they are vetted and perfect and work very well. Right?

So we always put security and the resilience of the network first and so we uh yeah we just are as careful as we possibly can and as methodical as we possibly can about it and again this is not me this is you know silvio and the team of cryptographers and paul regal who leads product who's just i mean this guy does not like to make mistakes i mean move fast and break things yeah eth of an ethos of technology, but that's really scary with people's money. Right. It's very scary with people's money, exactly.

Or access to their money too, right? Right. Exactly. When you just can't, I need to go pay for something and all of a sudden for six hours that doesn't exist. That's highly problematic. So we know where we're at now. If you had, in a perfect world,

it's hard to even ask about five years in crypto because it's probably dog years, 35 years. But what would Algorand look like in five years? Well, it's not so much what Algorand would look like, it's what the world would look like. You know, of the 1.7 billion people that don't have access to finance, a billion of those people have a mobile device of some kind. You know people that don't have access to finance, a billion of those people

have a mobile device of some kind. That's the world I want to see, where those people can borrow money, they can establish identity. The billions of people in this world that don't have identity, blockchain broadly and algorithms specifically can help solve those problems. You know what I think five to 10 years out, the world I want to see is where people can have self-sovereign identity. They can marshal their identity when they need to. They can keep and reveal information as they choose. They have access to finance. They can use the data about themselves to get credit.

They can, you know, in some countries in Africa, you need to know somebody before you can open a bank account, right? They can borrow, they can have micro insurance policies, they can invest assets at a micro level. That's the world that we want to see, right? And Algorand is just, I think, otherwise I wouldn't be here, obviously. I think it's a layer one that can deliver on that promise. I think that's an incredible vision. Are there any obstacles that you think could be, I think we generally surmount every obstacle, no problem in this space, but are there any that worry you

that could be permanent or debilitating and things that could happen that could really stop any of this? No, I think it's a slow grind, right? And the more you, you know, the further down you get, you come, there's something else that's kind of like a roadblock in the way, and you gotta think about how you're gonna get through that roadblock. That's innovation of, you know, the further down you get, there's something else. It's kind of like a roadblock in the way. And you've got to think about how you're going to get through that roadblock.

That's innovation of, you know, the cycle of innovation, right? This is any kind of innovation. But people care about crypto. And the more people that know about it, the more people that understand about it, the more people that see its potential. We as a global community, I mean, we, you know, we trash talk a little bit each other, but we are all in it together. I mean, I love my layer one brethren. I really do. We are all in it together for the big, for the potential and the medium term, right? And the bigger we get, the more unstoppable we're going to be, right? It's nice to hear you say that because I don't think that every layer one feels the kumbaya brethren spirit.

I think there is kind of a lot of competition and tribalism in this space. Yeah. Do you think that you experience that at all or do you think that you've managed to be Switzerland? You know, it's not so much Switzerland, but we do. I mean, it is true that we think that a multi-chain world is the world to live in. And, you know, different chains are going to be great at different things. The thing about Algorand, though, is if you cannot afford to sacrifice security, if you cannot afford to sacrifice speed, if you cannot afford to sacrifice decentralization, you've got to be on Algorand. Right. Because we just don't let any of those balls drop.

And that's been the trilemma sort of for anything not called Bitcoin. And you really feel like you've solved that? Well, Suleyman Kali, you know, when he, you know, he invented, right, zero knowledge proofs and verified random functions, right? So he watched this ecosystem grow up for a couple of years. And he was like, I don't know exactly if he was doing this, but he was like, yeah, I could probably build a better one of those. You know, like I'm the guy. Right. And so when he they went, you know, he's immediately able to raise money, hire like a crackerjack team of cryptographers and computer scientists and management. And they spent two years, raised much money, spent two years building this thing. We've never been down since. He, you know, was, you know, I think always had this vision of, yeah, we can deliver on this stuff, right? We can deliver on this. And then the trilemma came out. And I think that was maybe part of the idea of this pure proof of stake consensus mechanisms. Like, let's see,

can we have security? Can we have scalability? Can we have decentralization at the same time? Yeah, we can actually. And it's a pure proof of stake consensus mechanism. It delivers that. How much do you think that layer twos will play a role in that bringing mainstream adoption or being able to operate at scale? Or do you think that it can truly be done with layer ones? I think it's a combination. It's going to be a combination of layer ones, layer twos. Yeah, 100%. Are there any other projects that you're excited to potentially work with in the future that you haven't been in contact with or worked with yet? Yeah, you know, we think about sort of the crypto ecosystem broadly. So we have D5 articles. We're

excited about gaming. We're excited about our creator economy. We have a very good creator economy because our transaction fees are so low, right? So sort of NFTs, they can be small ticket prices. And for small ticket prices, you just can't pay a ton in gas fees, right? So this is just growing in a kind of Cambrian explosion. You know, in the real world, I've mentioned a couple more and we've got, but we're pretty excited about some partnerships coming up in, you're going to get me in trouble on Twitter, by the way, because I'll say something to you and then I'll go, what is it? When is it starting? But we have a couple of really interesting partnerships coming on in disaster relief payments. Do you know that in disaster relief right now, they're, they, not all the time, but they can travel with like tens of thousands of dollars in prepaid debit cards on them.

So they can hand out prepaid debit cards at these disasters. It's crazy, right? I know it's crazy. Your heart goes out to them, right? And so we are working now with the two largest disaster relief organizations in the United States to put all of these payments on the Algorand blockchain, right? So that when you have a, you know, your living room is flooded, you take a picture of your living room, the money arrives, right? And then the next agency can see, ah, they did get money from, say, FEMA, Texas, but I can't give them that, I don't need to give.

So you cut out the fraud, you make the payments more immediate, everybody's happier, you're not traveling around with debit cards on your person. It's really, so in disaster relief, also in remittances, we're working with a we're in we're in discussions with a a big um another kind of relief organization global relief organization about doing um local payments for them um yeah so we yeah we have some you have to

have me back again because i have these conversations, obviously, with everyone across the industry. And we talk about metaverse, NFTs, DeFi. And then we talk about metaverse, NFTs, and DeFi. Nobody that I've spoken to is talking about these very, very real world, very pressing and very immediate problems that you are seemingly solving. Yeah, super focused on it. We're super focused on it. And it's just going to get more and more and bigger and bigger. And I think part of the reason that I'm a good CEO for the Algorand Foundation and part of the reason that I was picked is that this is where I come from.

You know, I have the experience in traditional finance. I have cared all of my life about financial inclusion. I have cared all of my life about access to capital. I believe in a private sector led growth model, right? So that savers should be in good, well functioning financial markets, able to give their savings, not in a bank account where the inflation rate's 10% and they earn 2%.

They're losing money by holding their income, right? That they should be able to put that into work to finance entrepreneurs who don't have any access to capital right those entrepreneurs get those savings and what do they do they grow they hire more people they pay them more then those employees have more savings you know it's a virtuous circle of private sector-led growth that's how i think pros that's what I think the equation for prosperity is, right? Blockchain can deliver on that. And so we at the Algorand Foundation, and I personally am very, very focused on making sure that we play our small part in making this world a better place for that engine for growth that I think we can deliver as a layer one.

I love it. So when can we schedule, how far down the road do I need to schedule to get all the... I'll come talk to you anytime. But you know, I think by the end... I want to hear these things that we're teasing. Now I want to be able to talk to you about what's happening. All right, 2022. Let's talk again in the fall.

Okay, we're going to talk again. That's all that's a deal. Thank you so much. Thank you so much. I had so much fun. Thank you so much for listening to this episode. If you haven't already left a rating or a review on Apple Podcasts or Spotify, please do that now. Spotify just added ratings, so please go ahead and click that five star.

I'll see you guys next time.