Welcome back to the Payment Shed podcast. Today we are joined by Jess Houlgrave, CEO of Wallet Connect. Firstly, thank you, Jess. Tell us a little bit more about you.
So I'm Jess, CEO of Wallet Connect. Wallet Connect is a network that comprises about 700 different wallets and over 60,000 different applications in Web3. So we allow wallets and apps to connect and communicate with each other. It's that interoperability we work across chain, across asset, across device to facilitate these interactions.
Fantastic. So we anticipate you mentioning before 400 billion in network volume. What's driving that growth? It's incredible, but what's really driving the force?
That's the volume that our network will process this year. About 65% of that is DeFi, so decentralized finance things like staking, lending, and other things. Some of the fastest growing areas are number one institutional capital. These are funds that hold crypto, but they want to do more now than just hold crypto. They want to stake those assets, use those assets in payments flows, and other things. The second really big driver has been payments. Stablecoins is obviously the top topic for everybody at the moment. It's partly driven by regulation and things like the Genius Act. We are seeing more and more payments providers coming onto the network in a way that enables them to accept crypto payments from any of the wallets. This makes it really interoperable for end users and for businesses, for PSPs and for all of their merchants to accept crypto, manage crypto payouts, even do things. One of the things we launched recently was a point of sale SDK. So for point of sale devices, you can now just scan the Wallet Connect QR code and instigate a crypto-native payment.
Fantastic. Pretty impressive. Now when we talk about embedded finance, it's a buzzword, but actually everybody's using it, right? And if they're not using it, everyone's getting involved in using it. How are user control models playing their part in enabling that growth of the embedded finance ecosystem?
In crypto, this idea of the user being able to control their assets and their data is really core to the industry at its heart. What it means is providing a wallet and the private key that controls that wallet, the tooling to enable me as an end user to disclose my information to make a payment, to control my asset. In some ways, crypto is like one of the OGs of embedded finance because it really puts the user right at the center. It's interoperable because I can take that wallet anywhere across Web3. As we see this integration of crypto and traditional finance, we're seeing more and more of these things shared where traditional fintech has crypto features. Applications themselves are embedding crypto, and for the user, it's going to eventually hopefully become a much more seamless journey across these two worlds.
Where's the risk do you think for two things there? One, is there a risk to consumers here? And two, we talk about payment companies, gateways, acquirers wanting to get involved in the world. There's always been a slight concern of the cannibalization of card volume. Where's the risk to them, do you think?
What is really interesting when you think about card volumes is that today one of the hot topics is crypto-backed cards. But what that looks like is connecting a wallet, doing an at time of transaction conversion into fiat, and then it's running purely on those card rails from that point onwards. One of the things that we are seeing demand for is this new point of sale SDK, which means that the transaction is actually crypto-native from the moment it's initiated through the PSP until it's settled to the merchant, and then it can be converted into fiat for that last settlement leg. It completely bypasses the card networks. For an end user, this is like for like, but for merchants, it gives them potentially the ability to save quite a lot on acquiring fees. We are seeing it's very early days. Don't get too excited because there's still a lot of work for better user experience. But I think it's something that is top of people's minds. It's like how do we disrupt the old way of doing acquiring. Having said that, there are still a lot of challenges to overcome. User experience is one of them. Still quite painful when you're using crypto. Today we're trying to solve a lot of that. Not needing to know which asset my chain is on, not needing to know the difference between the 108 different stablecoins that are all USD something. There's still some things that the industry needs to work on so that end users have a safe and secure experience.
When we talk about interoperability and stablecoin, we know it's huge. We talk about Web3 and we hear it every single day. What does Web3 mean to you as an individual within this ecosystem?
On the personal side, I think self-custody or the right to self-custody is really important. That doesn't necessarily mean that everybody will want to self-custody, but giving people that option to do that, and also to not be completely cut out from the traditional financial world, is really important. We've been working as a company on lots of things like travel rule verification or message signing capabilities for wallets so that they can interact with the more traditional financial services in a seamless and compliant way. That's one thing that's super important for me because I think that over time, individuals especially from some particular places around the world will want the ability to really control and hold their own assets. The second thing is that we see just so much demand for these better rails. How do we make all of this way more efficient, which ultimately doesn't even need to be about self-custody, but it's about removing some of these actors from the ecosystem who are very rent extractive whilst continuing to provide a better service for consumers.
Fantastic. And look, we're here at Money 2020. What's been your highlight so far, your lows?
