Community AMA Recap
I. Intro
Slavian: Hello and welcome to another AMA with the Founders!
This is a big one!
As usual, we’re going to start with some interesting questions you’ve been asking and then go to your live questions and thoughts.
We’ll try to answer as many questions as we can. Don’t worry if we didn’t include yours. You can ask live (in the second part of the AMA) or wait for the next AMA, where we shuffle topics!
Let’s get started.
How are you doing, Robert and Derek?
Robert Sharratt: Hello everyone! Thanks for joining us.
Derek Mayne: Hi Everyone! It’s been a busy week…
II. Community Submitted Questions
Slavian: Indeed, what a week!
Let’s jump right into some popular questions from the community now. Thank you to everyone for contributing!
Q. What is going to happen with the reclaimed hack funds and when will the actions begin?
Derek Mayne: Monty is ready.
Before I answer, Monty wants to say hello:
A. The overall situation with Dodo is that they have returned the original USDT and ETH as we announced. Yesterday, we received another small amount that was returned by the hackers, being c11k USDT and 1000 wCRES. In parallel, we are filing criminal reports with the Swiss and Singapore cybercrime divisions as well as with the regulators. We are continuing to work with Dodo to find a solution but it seems like there may be a delay whilst we negotiate the final settlement. We can say that all options are on the table. For obvious reasons, we will not comment on the state of the negotiations until they are fully resolved.
The hack has had several implications for CrescoFin, both good and bad. The bad is obvious, we have economic loss to the token holders and we are still missing c62,000 wCRES. The upside is that it has advanced our fund-raising efforts. After we stopped doing strategic sales, we announced that we would do some select selling directly into the market in order to meet our fundraising goals without affecting the liquidity in the market. Now that the USDT and ETH has been returned to us, there has been a strong sentiment for us to hold on to this to meet the company’s cash flow needs.
As I’ve said before, mitigating the economic loss is the top priority in resolving the Dodo hack. Using the ETH that was returned, we will be starting a staged buy back of wCRES. We also believe that the organic buying from existing and new token holders will help fill some of the gap, or just shoot past the pre-hack level of $9/0.005ETH. The buyback will be in small amounts, ranging from 5–20 ETH at a time. We cannot disclose when these amounts will be deployed as it would advantage or disadvantage certain groups. We will endeavour to report the transactions as soon as they happen here and in Discord. We will deploy an initial tranche of 200 ETH over the next 7–10 days and then evaluate the results. The USDT that has been returned is now in the cash flow forecast and will be used to fund the near-term development as well as further tests on Aave.
Slavian: Q. How exactly does the FIAT on and off ramp work when you’re not a custodian?
Derek Mayne: A. We hope to be releasing an updated road map shortly once we have the final stages of the app integrations fully mapped. This will show that our v1.1 of the app that will have the FIAT on/off ramp which will be insured. We have agreed commercials of a full custodian agreement this week and will make a formal announcement once we have signed the agreement.
Slavian: Q. Can you tell us more about how you plan to scale the process of finding and buying invoices? For example, the process with 20B AUM will surely be much more difficult and labor/time intensive than with 1B?
Derek Mayne: A. This is favourite part as the heart of CrescoFin is Proof of Delivery 😀
Our plan has always been to raise the 1B in the telecoms through the existing channels. In parallel, we are developing funding lines in human resources/staffing, digital revenue streams, and other real world supply chain applications like the automotive industry.
In order to reach 20B, we will need a top-down approach and be working with the major Telecoms providers, rather than with their suppliers. We have a pilot of this coming with a small Telco in Q3 which will lay the foundations for larger versions and mass adoption.
This will also play into the next phase where we launch our own insurance captive.
Slavian: Q. Will there just be trading now on Uniswap, no other exchange? So no arbitrage?
Derek Mayne: A. The immediate plans will be to use Uniswap only. I’ve seen the bot still trading and front running a few orders which makes me wonder where it’s getting its data from. Any help from the community here would be much appreciated, especially if there is a solution.
We are still discussing using a centralised exchange and perhaps further deployment of the Balancer LBPs. Both would be effective methods if we wanted to raise further capital or have a stable distribution of tokens into the market.
Slavian: Q. What is happening with the money market on Aave? It’s been promised since December. Can we have more info about the relationship between Cresco and Aave ? (Except the earning from yesterday)
Derek Mayne: A. The core of the Aave money market is CrUSD. Can everyone go and download some on Kovan please:
We’re integrating the last bits from Chainlink on the Mainnet, namely the Proof of Reserves, then it will go live. We will still need to get approval in governance forum from Aave but we know a guy there who will help and push.
To clarify, the test amount we placed on Aave yesterday is to get our insurers involved more with DeFi products. It’s easier for everyone around the table to follow the process once we have a live placement. Aave is a great short term tool for us to deal with short term fluctuations on funding but we need to make sure our insurers fully understand the process.
Slavian: Q. Are you going to have frontend access to Aave? On the website or mobile or both? Another Swiss company already offered it this week, why not you?
Derek Mayne: A. Yes.
Slavian: Q. Do you know if you are going to put in a referral system to attract more people?
Robert Sharratt: A. We are working on a compelling marketing strategy, which we are really excited about. This might include referrals. Our goal is to have at least 50,000 users in the short-term. We have a really cool chat function built into the app, modelled a bit on WeChat Pay and with the goal of having a richer engagement with users. You will be able to chat with the team.
This is designed with an in-app reward system, including for referrals.
Slavian: Q. What will the requirements be for the visa/mastercards to be issued? Will they work in conjunction with the upcoming CrUSD or through usdt/usdc etc?
Robert Sharratt: A. The first phase for the cards will be in fiat and for residents of Switzerland, the EEA and UK, starting with CHF, EUR and GBP. Probably Mastercard will come first, virtual and physical. Just basic cards. We will then be adding crypto, including our CrUSD stablecoin. For crypto, Visa is likely to come first. We are also applying for membership of Union Pay. Cards will also eventually work with other stablecoins, including USDC and Tether. The idea is that you can spend your crypto in the real world to, say, buy coffee. We are also working on being able to spend gold on your cards. We will introduce premium cards later, probably in the summer, in a quick roll-out.
We are also looking to introduce cards in other territories. The first to be added will likely be in Canada and Vietnam (don’t ask why these countries).
Slavian: Q. Other products have seen massive success from offering real incentives for those that hold/stake a certain amount of token (this could work great for wCRES) to get a certain benefit tier of card use like free subscriptions, fee free conversions from stable USD/ or ETH to spendable fiat via card, fee free ATM withdrawals and FX fees etc. Could something like this work for wCRES to draw additional people to the app/”spending account” element of the app, which would further encourage them to utilise the “savings” component.
Robert Sharratt: A. We see this strategy used for utility tokens and we are thinking about this. We particularly like the idea of encouraging the savings component. We want to offer special offers to our shareholders and are trying to think about this. One thing we are working on is a Founder Tokenholder debit/credit card with special features for users, like no fees. We are going to start the card design process next week and have already had some cool ideas. More ideas are encouraged.
For the physical cards, we can print small batches of them, like 100 or 500, although these cost more.
For virtual cards, we can do customised cards on an individual by individual basis, something we are going to turn our attention to next week. Physical cards have to be approved by Visa and Mastercard. Virtual cards can be whatever we as a community want …. Ideas welcome.
Slavian: Q. Are you generally hiring and what roles?
Robert Sharratt: A. Derek and I built this company and hired the team to get through to the time of the product roll-out. So, we have some talented devs in place + some functions outsourced. We may bring some of these functions in-house. We have a great marketing team in place. Head of compliance and head of insurance in place.
Part of our model is to involve partners, particularly in the TradFi space where some services are low margin.
We are likely to add people to cover different specialities, like DeFi Lending or custody or cards. We are also going to add people to focus on specific geographies, like South America and Russia and China.
After we launch our core savings product and then the associated infrastructure (on-off ramps, cards, wallets, local payouts, etc) we are going to turn our attention to new product development that bridges TradFi and crypto. One thing we are working on it tokenization, like how we were the first regulated company to tokenize real equity. For example, we are working on offering tokenized, fractionalised real-world shares like AAPL, TSLA, etc. which, in a wrapped version, would trade in DeFi.
When the new website is live in a few weeks, we will be advertising some of the jobs for which we are hiring. If you want to help replace banking with code and make the world a better place, contact us.
Slavian: Q. When you mint CrUSD, does the deposit insurance still apply to the minted CrUSD? My understanding is CrUSD is intended to be a stable peg to USD (and will be 1:1 on mint I’m assuming), but doesn’t the insured nature of CrescoFin guarantee that it WON’T be a stable peg on the secondary market? Since it’s insured against custodial risk, shouldn’t it always carry a premium?
Robert Sharratt: A. Yes, the insurance applies to CrUSD, the same as in the real world.
It is officially equal to a USD. Of course, it may be higher quality than other stablecoins, as it is insured and issued by a regulated Swiss company, but it is designed to be equal to $1. On pay-out or conversion, you get $1, so in normally functioning markets it probably will be steady at $1. At times of dislocation, this may change, I guess.
Thanks to everyone for their questions. Even if there was a bit of disruption this week, the team mainly focused on our day jobs of building and planning to ship code.
Slavian: Thank you everyone! Let’s move on to the live questions now. I’m going to open the chat!
Chat is open!
III. Live Questions from the Community
terracrypt: Q. Can we see some new screenshots of the app? 😉
Robert Sharratt: A. New screenshots coming. We spent a lot of time in the past 2 weeks on integration to the banking/card systems.
Derek Mayne: A. We’ve been focused on the plumbing of the app, all the exciting bits inside, so the front end hasn’t changed much. I’ll post some more this week just so you can see.
Archon: Q. Thanks for the update! Do you have a timeline for app testing? Can’t wait to try it out.
Derek Mayne: A. We’re getting the critical path to completion mapped out this week, we’ll share it as soon as we have it!
Robert Sharratt: A. We are going to allow users to hold wallets in 24 local currencies, trade in almost every currency you can think of at incredible rates that only large corporates get, fiat-crypto conversion, etc. Spend your crypto on your credit cards. And, earn high rates on your fiat, 100% insured with no coverage limit. We are also working on a crypto deposit offer, details to come.
HuB: Q. 1. Any deal Except 1,139,456.20 USDT and 411.05965 ETH from dodo?
2.We will deploy an initial tranche of 200 ETH over the next 7–10 days and then evaluate the results. What about the other 211eth?
3.CEX or Balancer LBPs. Both would be effective methods if we wanted to raise further capital or have a stable distribution of tokens into the market,LBPs bad for holders ,cex is good ,CEX please?
Derek Mayne: A. I’m not sure I understand #1.
#2: If the price stabilised with the first 200 ETH above the original level, we will keep the remaining 211 ETH in the company treasury. #3: LBPs are great if you want to increase your holdings significantly. There are no concrete plans, just ideas right now.
Archon: Q. Tokenization is a big topic, especially in Switzerland — many are working on this. Do you plan to do it on your own? Are you seeking partnerships? (e.g. bitcoin suisse, sygnum, seba, etc)
Robert Sharratt: A. Yes, we are really interested in tokenization and fractionalisation of shares and other securities. We are going to do this with TradFi partners, not crypto partners. We were the first to tokenize real equity shares from a regulated company, so why not offer something like Robinhood in crypto? Globally.
Koploseus: Q. Do you have an idea of the % dividends that you will give to holders ?
Robert Sharratt: A. The company is still in the growth/early operations phase and we are reinvesting cash flows into development. As you can see in the IM and financial model, at a certain time (fairly early) cashflows exceed our fixed costs and the company should start to become cash flow generative after dev reinvestment. We will pay out a lot of this excess cash flow, after covering the budget. There isn’t a target % payout.
polkalorian: Q. Thanks for your time guys. Are you going to offer yield farming opportunities to traditional investors?
Derek Mayne: A. Our core offering remains the 3% yield
Archon: Q. You are trying to juggle both institutional investors and retail as two (very different) target groups. Many have failed due a lack of focus. What makes you so confident that you can build a solution (+ marketing, + customer service, + communication, etc.) for both target groups?
Derek Mayne: A. It’s a good point, our core product has remained the same, we’re just providing several different avenues to access it for different groups.
Koploseus: Q. What % of the dividend will you give to shareholders? Maybe is isn’t fix, but do you have an idea ? Like 10% in 2021 , 20% in 2022, 50% in 2020 aha
Derek Mayne: A. We don’t have a firm answer on this right now, we’re really focused on delivering the app. There’s a great calculator out there now though!
Whaleshark: Q. Hey guys lurker here who loves the project and checks in daily. Was wondering about the current liquidity and if the team has given any thoughts to using the Bancor model? If the team could get a pool started there with a small community push it might be possible to activate single sided staking at some point in the future so people holding long term can pool in wCres only, and earn trading fees on a platform that’s growing exponentially and looking likely to flip the big players in DEXes some time in the future
Slavian: A. Thanks Whaleshark. We’d have to whitelist wCRES with Bancor to open a one-sided exposure pool (to avoid IL). But as per Bancor documents, “Tokens with permissions that grant administrators unrestricted mint/burn capabilities’’ can’t be whitelisted.
And to comply with Swiss law, wCRES Token Holders that are on Swiss sanctions lists cannot swap to CRES.
Jayjay: Q. As far as competitors are concerned: are you aware of any of the big defi platforms going forward to offer a saving product with 100% insurance like you are going to? I am wondering why they have not done that so far.
Derek Mayne: A. Insurance is not easy and we have a big head start on this.
Robert Sharratt: A. The issue has to do with the credit risk of the Obligor. For us, this comes from real economy cash flows and our Proof of Delivery model. This doesn’t really exist in DeFi. Getting good insurance cover at a reasonable price is hard; that is why we have an in-house head of insurance. DeFi protocols protect themselves in other ways, using algos or game theory. Aave’s safety module is a good example. I love it. But, it isn’t the same as insurance. You are not going to get a family office to put millions into this or get people to pay their salaries into Compound, imo. We focus on a different risk/return segment. The main competitors are TradFi banks.
Dejv: Q. On one of your medium articles, I can read “We purchase short-term invoices to be paid by investment-grade companies and take title to the invoice”
I understand that you buy and resell something. But what is the product exactly? Would you have any specific example of what you would be trading?
Robert Sharratt: A. Every business relationship starts with a seller selling something to a buyer. We get the seller and buyer to agree to capture this in our smart contracts, so the terms are clear. We take an old legacy model and apply blockchain tech/crypto. Delivery from the seller is recorded on-chain (our Proof of Delivery), which cuts out disputes. We take the invoice from on-chain data, which cuts out fraud. If the buyer doesn’t pay, the insurance company pays. We do this in a few industries. One I like is staffing, the gig economy or software engineers. Another is Telcos. You can see a video about this on our YouTube channel.
Dejv: [In reply to Robert Sharratt]
Thank you, I will have a look at it!
i chart in log: Q. This may be a question for legal/compliance counsel, but is there any legislation in the pipeline that you’re aware of that would open the US market and make CrescoFin products/equity available to US customers?
Robert Sharratt: A. We are going to offer our product in the US, in a second phase. That is likely to come in the summer or the autumn at the latest. We have already received indicative approval to offer the wallets in the US, using a partner license.
Derek Mayne: A. We’re currently looking at all markets globally.
Whaleshark: Q. To your second point does that mean Cres is trying to stay away from DEXes?
Derek Mayne: A. Not at all, a DEX is great which is why we instituted the Geyser this week. It’s been a great success by the way. We’ve been adding wCRES daily to keep the APY above 75%.
Skinnjakka: Q. Any plans to apply for a crypto license from Malta perhaps like I see projects like Everest, crypto.com etc doing?
Derek Mayne: A. I think you’ll see once you roll out the app that this would be a step backwards. We are working with major banks and custodians.
Robert Sharratt: A. No. The license in Switzerland is hard to get and Switzerland is the right country for a serious finance project.
arruran: Q. Do you have any plan to develop in the Middle East ? Is the visa card would be available to citizens or only institutions?
Derek Mayne: A. Our Shariah compliant product is coming! Cards will roll out in regions, Europe/EEA first.
Robert Sharratt: A. The Visa and Mastercards are initially going to be available only to retail users. Institutions to follow.
Linix: [In reply to Derek Mayne]
Q. Is that still coming in March? I read in some ama that you had anticipated it.
Derek Mayne: A. Yes, the first step is with the Islamic scholars, then structuring how it sits with the rest.
Magellan Fall: Q. A recent documentary on Swiss television claimed that major swiss banks (and other institutions) have been allegedly spied on by the NSA for decades, selling defective equipment to banks. This shows that the secret bancaire is a huge illusion that people believed for many years.
Does CrescoFin fix that?
Robert Sharratt: A. I saw the documentary, which was interesting. Our software isn’t a typical “core banking” platform, like Temenos sells, for example. We have our own customised version. Spyware is hard to find, of course, but acting as a fiat-crypto link is something relatively unique for a regulated company.
As I write on Twitter a bit, my solution is to “decentralize everything” …..
Цезарь: Q. Will the marketing also include Emirates and other Shariah governed locations?
Derek Mayne: A. Yes, it will probably have to sit in a fund structure so the Islamlic cash can be segregated.
Star Sky: Q. I noticed that there is a Chinese translation version on the official website. Does the company have any plans to do business in China in the future?
Robert Sharratt: A. The website (being re-done) will be in several languages in the future: French, Spanish, Italian, Russian, Portuguese, Chinese, Arabic planned.
Derek Mayne: A. Yes, Q2/Q3 we need to get the app translated in several languages
SolciV: Q. Do you have a plan to launch a IBAN service for your clients?
Robert Sharratt: A. All users will be able to get IBANs. There is going to be a Cresco SWIFT identifier. Also, local currency accounts. Users will also be able to choose custodial or non-custodial wallets.
Koploseus: Q. Will there be a professional account ? For people who want to get in the crypto business?
Robert Sharratt: A. Yes. And very welcoming of crypto businesses. Globally.
Derek Mayne: A. That’s more inline with trading accounts, this is still a banking alternative.
Robert: Thank you to everyone. The support of our community gives Derek and me strength when things are a bit difficult.
Gotta get back to replacing banking with code.
Derek: Thanks everyone!
V. AMA Ending
Slavian: Thank you Derek and Robert! Stay tuned for next time!
Цезарь: Awesome thanks
Derek Mayne: Always interesting with CrescoFin…
Magellan Fall: Solid AMA, cheers to the team
SolciV: your strength gives us hopes to change the banking system ;)
Slavian: I think this is one of the best AMAs we’ve ever had. Thanks so much for sticking around. For all the new faces around here, these AMAs happen every 2 weeks.
Derek Mayne: Have a good weekend everyone!
i chart in log: Thanks guys, have a great weekend and take a little time to relax from this past week!
Derek Mayne: Have a good weekend everyone!
i chart in log: Thanks guys, have a great weekend and take a little time to relax from this past week!
Цезарь: Thanks for the pamp
Krillin: let’s go Cresco!
Цезарь: It totally restored faith
Koploseus: never gone ;)
