B (3:31)

Okay, yeah, that makes a lot of sense. You know, one thing that is obviously interesting here is that Polygon has been a more general purpose sidechain or you know, L2, you could call it on a Ethereum. So am I right in thinking that this shift is that Polygon will be more like an app chain and specifically a B2B app chain, which in a way to me is very similar to like a codex is. Am I thinking about this correctly?

A (3:59)

Yeah, so I think there's generally been. This space is a general consolidator and like this idea of either you're a general purpose chain or you're an app chain. I'm like very much a believer in this idea of like sector specific chains. Right. So you're not just offering like one app and that app is going to fill all of the block space, which in some cases makes sense by the way. Right. In our case it's more like we see a use case that could benefit from specialization and if we can actually provide that specialization, then it'll be a better experience for anyone who wants that use case. By the way, I do assume that in three years from now there'll be some payments use cases that are so vague that like it'll make sense to have an app chain just for that. I don't think we're there yet at all and so I don't really think of Polygon at all like an app chain, but I do think of it much more like a sector specific chain focused on payments.

B (4:46)

Okay. And so because there actually already are some, you know, more kind of general purpose apps on the chain, what will happen to those? You know, most famously Polymarket is on Polygon. So I was curious like what that means for existing apps on Polygon.

A (5:00)

Yeah, so I think it all depends how you define payments. Like people think of payments as just being hey, you're transferring money back home, cross border and that's the only use case. But if you think of like most things you transact with. So take a game, a video game so people can say, well you're not a gaming tool. It's like, okay, cool. If you want like NFTs within your game, Polygon probably isn't the best chain for that. There's probably another better chain. But if you want to offer like a better, like an easier ability for your users to on ramp and actually like use their money to buy in game items and actually like buy things within a game, that's actually probably a good use case. It's just a payments use case. I view Polymarket like very similar to this, which is the idea that you come in, all you're doing is you're transferring USDC to buy a position. That's basically what you're doing now one of the things that we did is we announced our vision of what payments will look like over the next 10 years through what we call the Ethiopia money stack. And one thing that was um, like really important that, that when we described what it was, was we didn't just say, oh, you can move money anywhere in the world. We said you can move any money anywhere in the world and you can put it to work. Because ultimately, you know, if we just want to like move money around the world, we can just look like a, you know, a Web2 company. You can on ramp, you can move your money, you can offer. But like ultimately like we want all money to live on chain. Money on chain is a better experience. The only way you do that is if people have something to do with their money on chain. And so there are definitely like simple things that you can do with your money that like we would expect people to continue to do on Polygon. So you can earn on it for example. Right? That, that would be an easy example. We also are totally open and we've been working on like cross chain interop for a long, long time because of our view on this that, like, people will form their own, you know, chains and they will move money on Polygon and they need to seamlessly just be able to, like, earn on another chain or swap on another chain. And that's like perfectly okay. And so. Yeah, but all the apps that are currently on Polygon, I think they'll be very useful for those who will, you know, who are moving money. And over time, as they get bigger and bigger, they'll probably look to say, hey, can I get an even better experience if I offer my own chain? Oh.

B (7:14)

Oh, interesting. So I'm so. So it sort of sounds like there will be some period where these apps exist on Polygon along with Polygon's purpose to be this, you know, kind of full stack payments chain. And then eventually some of them might move off. Is that what you're.

A (7:33)

Okay, Yeah, I think. I think most apps that end up being successful will be so wildly successful that they will want their own block space. I think that's just the case, period. And so they will naturally choose to move off. Frankly, they would choose to move off even if we did specialize in payments. That's just what would actually make sense for them as a business. And so I think that that is eventually going happen. Until then, we can offer all of those useful services that people want to do with their money. They're available on Polydyne. It's one of the nice things about Polygon, but like, by the time that they actually choose to go and develop their own app on their own chain or move their app over there, well, now the next thing is, because Polygon has believed in this interop and has been working on it a nice time, you can seamlessly actually go and have that experience that we're having pure on Polygon. You can have it on another chain.

B (8:19)

Okay. And so Polygon has been around for a while, and I was curious why you're making this shift. Now, you've been explicit that this is about generating revenue. And I wondered, you know, what is it about this moment in time that makes it important for Polygon to prioritize cash flow?

A (8:35)

Yeah. So I think there's a couple parts. So first, the shift to payments is something that's happened probably about like 12 months ago is when we decided to do that. Right. Like, acquisitions of the tech that we're doing and the work that we're doing takes many, many months to play out. So it's definitely a shift that's been in the works for a while in terms of, like, the revenue generating side of things Polygon's long time been, I would say, the one that has mostly spearheaded this idea of like actually not generating revenue. So because we've been working with enterprises for so long, we used to have offers all the time of like enterprises begging to pay us. They actually didn't understand this concept of like doing business and not paying somebody for a service, buy it. But the reality is we weren't providing the service. The service was provided by, you know, the over 100 validators on Polygon chain. And the reality is now we are shifting into a world where we are providing specific services so that we can make it even more desirable to come and we should be paid for that. And what that means is that we will have more, frankly cash to just be able to more aggressively execute on this than if we continue to say, don't worry, you don't need to pay us. This is a free service. It's, it's just, it's not. And I think if we want to give the best service possible, then we're going to actually charge for it.

B (9:56)

Okay, and so you said that your customers will now be banks, fintechs, enterprises. And I wondered. So is the thinking that this is something similar to a white label product where they're using Polygon's, you know, stack on the back end, but, you know, the front end is, you know, branded around that company? Is that how it will work?

A (10:15)

Yeah. So I think there's going to be, there'll be an evolution, but there's multiple services, right? You've got like a B2B service, you've got a B2B2B service, you've got A B2B2C service. And we don't really think of ourselves as being like B2C category at all. Right. And so in that context, there will be B2B offerings. So for example, if you're a Treasury manager at a company and you want to move money around the world, then you would use the open money stack to do that and then you would use it to earn and you would choose to not move your money off chain because why do you want to pay to off ramp and then automatically again where you can just sit there and earn some RWA investment that you're holding. So those will be like direct users of the open money stack. And then what we expect is that as the open money stack gets built out, we would also be offering it to a fintech, for example, that says, hey, I want my users to be able to move funds around the world and I'm trying to decide what solution, what makes sense and then they would choose to use the open money stand.

B (11:12)

Okay. And do you have a sense of like what size customers you'll be going after or is this really for you know, even small businesses as well as large, you know, multinationals?

A (11:23)

Yeah. So I think part of this honestly has to do with like some pricing decisions that we're trying to figure out along with, you know, CoinMe and sequence teams as we brought them in. But you know, when we think of where we are strong historically, it's been in the, the like large enterprise and institutional relationships that we've had. And so that is most likely where we're going to start. Now that's a little bit different from where coinmead's been strong historically. And this is part of the reason why there's a lot of synergies here. And same thing with Sequence actually where they've served more of like, I'll call it the longer tail market in some cases enterprises as well, but generally speaking more that mid market. And so I think our ability to sell into enterprises products that are already good and again once we bring them together, once simple, very high quality product while also adding products that are available to, you know, the mid market. And that includes like Web3 wallets. Right. Like Coinbase currently is used in the Exodus wallet for example. Right. So there's, there's a lot of examples of like where I would expect like wallets will really appreciate having something easy like this. You know, apps, they, you know, every app should have the ability to go cross chain in one click, deposit directly into, you know, a swap or earn product. They should also have on and off ramps. So that's the part of the segment that I think is already being served and frankly is quite competitive. Our ability, what Polygon really brings is that ability to go out to enterprises who often already know Polygon, trust Polygon and bring those products again in a more like a consolidated way to them.

B (13:01)

Okay, so now tell me more about these two acquisitions, CoinMe and Sequence. What do they do and how do these puzzle pieces fit into your bigger picture?

A (13:11)

Sure. So COIMI is a, provides what they refer to as crypto as a service. So the general idea is the ability to through an SDK or API, be able to convert your fiat into crypto. That's generally the basic service. One unique feature thing that Coinme has and frankly that is more known for, even though it's a small part of his business, is actually cash on ramps. So the ability to convert like physical Cash into crypto. Now we view this as incredibly valuable. And the simple reason is if you are somebody who wants to send money back home, anywhere around the world in the US it's not easy to do that right now. But where you can just take that cash, convert it into stablecoins and send those stablecoins, you actually do fulfill this view of actually banking the unbanked and actually giving them access in a better way than what currently exists. And so there's that very unique proposition that Fundme has. But in general it's this ability to on ramp a2 crypto in whatever that might mean, including stablecoins. And so when we talk about the open money stack, we think of like the polygon chain. And then we think of, okay, on ramps and off ramps. The next two parts that we think about are wallets and cross chain infrastructure and that's where Sequence comes in. So Sequence has been building wallets as a service for the last seven, eight years now. Very battle tested infrastructure. And so we want to make it easy for anyone who wants to use their own money stack to spin up a new wallet and offer that. On top of that, they released a product recently called Trails that I'd argue is the best cross chain interop experience. It's a very high level up on like the app stack. It's like more of an intent based framework, but it's currently used on project that we incubated at Polygon Katana. It's currently used as the main experience over there. And the really cool thing about it is people think of the cross chain experience as I go to a bridge, I bridge over, then I go to the app that I want to use, I deposit into that app. This is actually like a, you know, SDK that the app uses itself. And in Katana, for example, you can go and just click earn. And from there you're just going to select what asset you want and what chain you want it from and then what asset you want to deposit in and you just earn. And so that is the type of cross chain experience that we want. Like a very seamless one that is like actually integrated in the experience. Just like when you hit earn, you say, do I want to pay? You know, pay with a debit card or a credit card. It's the same idea. And so when we bring all of these things together, we get this comprehensive stack of a chain on ramping and off ramping. You get the wallet and then you have the ability to move funds from any other chain into any other chain. And that's kind of like the core components that we get. And then the last part that's really missing for the open money stack to be viewed as a whole is really this idea of like being able to do something, you know, with your funds. So whether it's burning or swapping or you know, holding an RWA as an investment, like lots of different, you know, options there. These are things that are already on Polydig pos. They're also things that will tap into, you know, really where the best experiences are. But again, in this single API.

B (16:36)

All right, so in a moment we're going to talk a little bit more about the details of what this means and the significance for Polygon. But first a quick word from the sponsors who make the show possible. Looking to unlock your crypto's liquidity Figure offers crypto backed loans with an industry low 8.91% fixed rate. They're the only major provider with decentralized MPC custody and new liquidation protection. Take out a loan@FigureMarkets.co Unchained. Back to my conversation with Mark. So I've seen you call CoinMe's cash to crypto on ramp a Trojan horse and so explain, you know, what's on the other side of, of that gate. Yeah, what, what is in the Trojan horse?

A (17:18)

Yeah, it's a little bit of what I touched on earlier around this physical cash on ramp. Right. So when, when we are in conversations with anyone about wanting it on ramp, most people think of it as just a, it did go on ramp. Like hey, I could pick the debit card and get on then. That competitive landscape is like really tough. There's a lot of like people who do that, like companies that do that very well. The, the trigon horse is being able to do that with cash. So why is this so unique? Like you think people don't want to like walk over somewhere and like deposit cash and then like receive crypto and go use it and that there's a few things. So first is, you know, anytime you're doing any electronic transfer, there is some risk involved with it in some way. And so you're either being charged higher fees or the, the one who's actually servicing that has, you know, turnback risks, fraud risks, things of that nature. With cash you eliminate. So you can think of when you onboard to an exchange in some cases and in most cases you don't, you can't actually use those funds immediately or you can use some small portion of those funds immediately with cash, you can use it immediately. And so there Is this ability when, when we talk to, like, apps, they're like, okay, there's. I can actually, like, offer this in 50,000 locations around the U.S. like, I might as well do that. The thing is, once you have that integration done, the next question is, well, why don't I just use CoinMe for the other things that they offer? I already off that integration time. And that's where I think that that kind of, like, physical cache on ramp provides that the unique kind of wedge into conversations that it wouldn't have if you did not have that.

B (18:54)

Okay. And I also wondered, so Polygon once powered crypto features for Starbucks, Reddit, DraftKings. Those were all experiments. They didn't last long. But I wondered what you learned from that wave of, you know, working with these consumer apps and how you're applying that in the, you know, in your new iteration.

A (19:16)

Yeah, I think there's been. So I've been actually one of the most vocal ones about, like, us having made a mistake when we, when we were doing that. And the simple reasons, because, you know, back then it was experience. It wasn't things that were really going to drive on chain volume. And I've always said, since I took the role of CEO, I'm going to do things that actually drive on chain volume, period. That's going to be my focus. But there are benefits from that experience that are actually very, very meaningful. One is the brand reputation. When we go talk to an institution or an enterprise, Polygon is either like a known name or it's a trusted name because Starbucks and Nike and Revit and all the others have chosen to work with Polygon. So that has, like, when you're in the enterprise and institutional world, that has a lot of value. The second one is just how we work internally. It's this. There's like, when you talk to, like, a Web three like, app, it is a completely different world than when you talk to an enterprise. And understanding the type of service that they want, how we should offer that service, the type of relationships that they. They want, the type of environment that they want to, you know, do sandboxes in. These are all things that we have now done quite a bit. And most others who come from that world don't really don't have that experience. So, like, they just don't get it right. The last thing is one that's, that's actually really unique that I think most people probably don't appreciate. It's actually a cultural one within a company. So a lot of, like, crypto companies try to like convert themselves into like these non crypto companies that they can like do this. And this is something that Polygon did, did it once. What often happens is they just lose their like web3 roots completely or they're actually, you know, non crypto natives who are coming in. But the reality is that what we're offering is a hybrid where you want to have a deep understanding and bringing value add as crypto natives. But we want to be able to offer the type of service that enterprises are used to seeing and want to see. And this is something that I think we're just uniquely positioned to do as a result of all the experience that we have.

B (21:17)

And I also wondered, so you know, you obviously have the Polygon token as well. So with this shift, what does that mean exactly for the token? How is that going to be used in this new payment stack?

A (21:30)

Yeah, so ultimately for us it's all about driving volume to the chain, period. It's always been the case and I think we just have a much better ability to do that now. And you know, I, I often give like the analogy of like other networks and payments networks specifically. So you know, one of the debates that we had internally and that's been debated a lot is like how much volume can like you know, payments, which is a race to the bottom, really create. And the thing that I often point people to is like Visa's like annual report and Visa's annual report includes like a line item that is $70 billion and of revenue. And everyone always says that's volume based transactions, that's how Visa works. But it's not actually, that's only like part of what Visa does. The biggest actually part is this 10 cents or so and sometimes less per transaction that Visa captures. In a transaction based model, which is exactly how a blockchain works. You can translate that $17 billion of volume being about half of Visa's revenue fees is worth about 650 billion dollars. So you can translate that to 300, 325 billion doll. And so my view is if Polygon can capture a good portion of that, then you're going to see a absolutely massive outcome in the value of the token because the tokens ultimately captures that value.

B (22:55)

And I'm sure you're very well aware that stablecoins is an extremely crowded space. Just in the last year we've seen so many announcements and launches and all kinds of things and already we have heavy hitters. You know, Tether and Circle are probably the best known. But you know, we saw plasma, we saw a Stable Launch, usat, Tempo or, you know, some of these were just announced. Tempo, arc, there's PayPal there. I mean there's just so many. I mentioned Codex earlier as well. How do you plan to compete?

A (23:25)

Yeah, okay, so there's a few parts of this. First is we definitely don't compete on the stablecoins themselves. This is very intentional. Many of those that you named do compete on the stablecoins themselves, which creates issues because people do want to use different stablecoins and as we've seen, like businesses want to create their own stablecoins and actually earn the revenue off of those. So I think there's, there's a differentiator there that's obviously not enough, but it is one. I think the second thing is to recognize is like payments in general is like a game of partnerships. The, the number of payments companies that are competitors can work together is probably higher than what you see competition working together in than in any other industry. And the simple reason is because you need to fill G and you're willing to use the one who provides the best service to fill that gap. And so I expect several of the names that you named, I think that there, we do already work with several of them and we will continue to work with several of them. Right. And so I don't, I don't really think that like prevents, you know, any kind of like growth or anything like that. It's just normal. Now when it comes to like, how do we actually compete, like, what, what gives Polygon an advantage? There's a few parts. So first is almost everyone that you can name who is doing this is going to launch a blockchain, has not had a lot blockchain that has matured over, you know, more than five years. And that maturation is not just from a technical perspective, but it's also from an infrastructure perspective, an ecosystem perspective. Like it takes a long time to get a blockchain to have on ramps throughout the entire world that actually work well and to have use cases in every area around the world and to have the ability to on ramp and off ramp, you know, anywhere around the world in a seamless way. That's something that, you know, Poly unfortunately has, you know, you could say accidentally for payments purposes, but has built over the last five, six years. The second thing this does is it gives us distribution that others don't have. So most incumbents in the payment space operate in local, like regions. They don't operate globally. That doesn't exist really in payments in a meaningful way. It doesn't some unique situations, but generally speaking, you focus in certain areas. Like you can name, you know, 10, 20, 30, $50 billion companies that are just like only EU, only you know, us. And that is something that's very unique for us. When we look at what we've already built, we're like, okay, we already have incredibly strong relationships in Latam. I think there's, I can't really think of a fintech that uses a blockchain that does not use Polygon. Right now in Africa we have incredibly strong relationships. Biggest PSP Flutterwave just announced that they're going to be launching with Polygon. We've always been strong over there. India is obviously the home of Polygon, in many ways incredibly strong Southeast Asia. When you look at SGD stablecoin, you see more volumes there than others and you see things like D Local that are on Polygon. Revolut has done more volume on Polygon than anyone else in the UK and the euro. So we are very good and we have a team and it's a pretty big team frankly that is regionally based and that has all of these relationships. When we now want to gain adoption of the open money stack, this is something that we can do at global scale in a way that others have not done before. So this gives us like a very good advantage. And then the last advantage that I'd say is, I mentioned it at one point, it's this on chain first mentality. Now if you are a typical, if you come from a typical payments background that your goal is to make BIPs. In fairness, we want to make BIPs too. Like that's part of the reason for these acquisitions. But that's like ultimately like why you exist. That's not why we exist. We want to move all money on chain. And that does not mean move money on chain and have it disappear. It's like move it and keep it there. And when you do that, you need to think about things differently. It's not how do I on rent somebody move their money on chain and then off rent them. It's how do I on ramp them, move their money on chain and then give them things to do on chain. And that does require, you know, thinking about a wallet differently, thinking about identity built into a wallet differently, thinking about like the, hey, I don't need to be able to like offer these off chain burn products. I need to on chain burn products and like how those actually, you know, integrated with the rest of the experience. So when you bring all of these things together, we kind of think of that. And as like we actually had a significant advantage even over incumbents. But the real, the real that people hate to hear but is the reality. It's like it's all a coopetition for the simple reason that stablecoins are going to grow so massively that we can do decent and we will do phenomenally well. And if you do phenomenally well relative to competition, we'll do like we'll probably be one of the biggest companies that has ever existed in the world. And so there's plenty of room for like everybody to win massively if you actually believe like money is better on chain. And I, I think it's like not debatable that it is better on chain.

B (28:24)

You know, it's funny, I. So my next question for you was going to be about decentralization and I just noticed you just said if we, you know, succeed phenomenally, phenomenally, we'll be one of the biggest companies in the world. And you know, I was wondering like, you know, with this shift, how you're thinking about decentralization because this whole conversation, it does sound more like I'm talking to somebody who is the CEO of a centralized company, which I know you are for like Polygon Labs, but obviously the Polygon blockchain is supposed to be more decentralized. So explain how you're thinking about decentralization with this shift.

A (28:59)

Yeah, look, I think the whole point of blockchains is to have a certain level of decentralization that's necessary for its use case. Right. So Polygon blockchain has over 100 validators. It is a completely decentralized blockchain. The best way for the Polygon blockchain to have as much activity as possible is for centralized companies to push as much activity to that blockchain as possible. And so as a centralized company, I want to build an absolutely massive centralized company that can push as much activity onto that blockchain as possible. And then when we do that successfully, what we're going to have is an absolutely massive company and then we're going to have an absolutely massive blockchain. And both of those things are ultimately like symbiotic in the goal.

B (29:42)

All right, and last question. You might have seen that Vitalik Buterin, the creator of Ethereum, has warned that today's stable canes, stablecoins are fragile and overly dollar dependent. And I wonder if you are thinking about those issues as well when you're making this push.

A (30:00)

Yeah. So 70 or 80% of all non USD stablecoin volumes are on Polygon we have over 60 stablecoins on Polygon now and I think there's 18 different currencies on Polygon. We are very good believers that FX is going to be incredibly important. When you think of why it is that we've got such dollar dominance in stablecoins, it simply comes from the fact that trading is really what started and so everybody just traded in dollar dominance. So you just wanted more and more. But the more we embed stablecoins in the, the physical world, the more you're going to actually have people that need and want their, their local currencies. I am very much a firm believer that like if you look at the amount of dollars in the world in and then compare it to like what's that going to look like relative to stablecoins? I do think you'll see like an increase in dollar denominated stablecoins relative to others simply by the fact that it does give dollar access which is one of the value adds of, of, of stablecoins. And so you will have countries like in Argentina for example where people choose to hold stablecoins intentionally in US dollars and they can hold more of them than they could ever hold in actual like digital or physical dollars historically. So I would expect like a shift and let's leave aside other macro issues, just this, all things else being equal, you'd expect like a slight shift into like USD based stablecoins. But from our perspective FX is a $7 trillion a day market and that is more money than most people can conceptualize. And so being able to move a portion of that on chain is going to be really, really important. There are markets that are not available 24, 7, 7 days a week right now. They are available all the time on chain. And so I just strongly agree with Valk and it's, it's where we spent a lot of time and I think that the more liquidity we can get in FX pairs, the more we're going to be able to see the shift towards not just like USD stablecoins but like more broadly stablecoins for, for other currencies as well.

B (32:14)

All right, well Mark, congratulations again and I'm excited to see where this goes. It's been such a pleasure chatting with you. Thanks so much for coming on Unchained.

A (32:22)

Thanks again for having me. Appreciate Laure.