Part 1
Mr.Bụt:
We will start Part 1 : Basic Introduction of Velo Protocol and Guest Mr.Gaurang Desai Economics Advisor of Velo Protocol
We invite new guests to introduce themselves and the Velo project to everyone
Mr.Gaurang Desai:
Thanks to spare me some time to introduce myself
Hello Everyone, Gaurang here!
I’m the Head of Finance and Treasury at Lightnet as well as Velo’s economic advisor.
I’ve been with the firm for 2 years.
I was a Senior Quantitative Strategist and Risk Officer at CPB Equity in Bangkok and was an Asset Liability Management & Credit Risk Manager at AIG in New York.
I hold a MFE from the University of California, Berkeley and a Bachelors in Mechanical Engineering from MIT.
And now I’m an Economics Advisor at Velo Labs. Thank you all very much for the opportunity to answer your questions! I am really looking forward to this!
Mr.Bụt:
Thanks for a brief introduction about myself, so about Velo protocol
Mr.Gaurang Desai:
So about the Velo protocol
The Velo Protocol is a blockchain financial protocol enabling digital credit issuance and borderless asset transfers for businesses using a smart contract system.
It enables Trusted Partners to issue digital credits via a smart contract layer, using the Stellar Consensus Protocol to process and settle transactions.
The Velo Protocol can issue digital credits that correspond to any fiat currency.
Velo Labs is incorporating the latest blockchain technology into the system of traditional finance to construct a foundation upon which financial services providers are able to construct real-worl applications in service of today’s increasingly complex user and business landscape.
The Velo Protocol is poised to become the world’s largest digital credit protocol, capable of generating trillions of dollars worth of digital credits in service of numerous real-world use cases including cross-border remittance, lending, payment, and loyalty point programs.
Mr.Bụt:
Thanks for a little more about the Velo protocol, we will continue with Part II
We will post 5 questions collected from everyone’s twitter
Part 2
Mr.Bụt:
First question: Can you give us a brief introduction to the Velo project and what it’s designed for? @GrDsai
Mr.Gaurang Desai:
Velo Labs is building a unique federated credit exchange network. This network is powered by the Velo Protocol — a blockchain financial protocol enabling digital credit issuance and borderless asset transfers for businesses using a smart contract system.
Our core mission is to enable partners to safely and securely transfer value between each other in a timely and transparent way. To do this, the Velo Protocol enables its partners (called “Trusted Partners”) to issue digital credits via a smart contract layer, using the Stellar Consensus Protocol to process and settle transactions. Within its ecosystem, the Velo Protocol enables multiple business use cases that are all based on its core function: issuing collateral backed digital credits which correspond to any fiat currency that can be used for frictionless value transfer.
The initial focus of the Velo Protocol is to empower partners in the remittance and money transfer markets of Southeast Asia. The immediate effects of Velo’s partners using Velo technology will be felt by the large population of underbanked and financially underserved in the region, as they enjoy lower fees, faster transactions, and wider coverage.
Mr.Bụt:
Thanks for the reply from the guest, we will continue with question 2
Question 2: What is the main reason of having only 40 million circulating supply against 30 billion total supply? To a potential investor, it only looks like it’s to pump the price at the start and then release more tokens and then price dumps. @GrDsai
Mr.Gaurang Desai:
That’s my favourite question
The amount of tokens are to future proof the system as the total is fixed and cannot ever be increased. The volumes in cross border remittance are near 1 trillion a year alone. Trade finance is a multiple of that. The available market is huge, and growing. So with this in mind, and a long term plan of 5+ years to get to where we want geographically and in terms of singing up 100s of partners, we felt the amount of tokens was justifiable for the growth we envision. Remember that all digital credits in the system must be backed by locked up VELO tokens, so in order ensure we have adequate reserves, the initial supply had to anticipate a decade (at a minimum) of transaction growth. We do not feel we are starting with a small amount of tokens, as most the total supply is LOCKED UP for many years.
Mr.Bụt:
Thanks for the answers and the illustrations from the guests, we will continue to Question 3: Each project has interesting stories before it was created. So can you tell people about the story that gave you the motivation to build and develop a great project like #VELO?
Mr.Gaurang Desai:
Certainly, we often stress that Velo is an adoption-focused blockchain project, with an initial focus on the Southeast Asian market. The reason for such a focused approach is due to the real market needs we have noticed in the Southeast Asian (SEA) remittance market.
Currently, the SEA region has over 170 million people that have difficulty accessing modern financial services, especially remittance services. When residents of SEA try to send money abroad or send back money to their home country while working abroad, they often face high fees that average 7–8% or higher.
Moreover, due to remittance service posts being far away from where they live, many SEA residents have to physically go to great lengths to transfer funds.
With the Velo Protocol, we want to solve these problems. By leveraging blockchain technology, we can significantly simplify the process, thereby greatly reducing transaction costs.
Additionally, by partnering with great partners such as Lightnet & Visa, Velo Labs is able to provide more convenient terminals (be it through convenience stores or through mobile phones) for users to access these low cost services. In the end, we want to help the unbanked and underbanked populations enjoy the same tier of financial services that others can enjoy!
Mr.Bụt:
Thanks for the answer, we will continue with Question 4 : What sorts of partners does VELO have? How involved is the CP Group?
Mr.Gaurang Desai:
Our Chairman is a prominent member of the CP Group family and is deeply involved with many of their business lines. CP Group owns 7–11 in Thailand and has an extensive trade finance operation. So, we are confident we can access deep liquidity through these connections and networks.
Mr.Bụt:
Thanks. We continue with the last question that ends part II : Why would a company use VELO instead of other digital credits an[d] other stablecoins?
Mr.Gaurang Desai:
The Velo Protocol allows for bespoke digital credit issuance, and this is powerful. Let me explain more deeply…
When a typical fiat transaction occurs between non-G-7 currencies (say Thai Baht to Philippine Peso), the funds generally must go into USD first, meaning THB — USD — PHP. If you use existing stablecoins, like USDT, you are not really solving this issue. Instead, with Velo Protocol, a MTO in Thailand can be issued vTHB, and one in the Philippines, vPHP. Velo will create an exchange that allows a direct conversion, and the spreads (and costs) will naturally be much lower. Right now, the stablecoin market is centered around USD and just starting to get to the other G-7 currencies. That does not work for Southeast Asia or LATAM.
It’s true that lots of companies have tried or are trying to solve this remittance problem — there’s Ripple, Facebook with Libra, Stellar — but these solutions usually just focus on improving remittance’s messaging layer.
Other projects — specifically stablecoins — have taken a stab at the settlement layer, but none have successfully solved the issue of how to create true trustless relationships in real-world settlement scenarios.
I believe there are three main reasons why all these other projects have struggled. Namely, they each suffer from at least one of the following: a lack of transparency; limited versatility; or inadequate regulatory compliance.
I think the Velo Protocol is designed to solve these three problems.
Mr.Bụt:
Thanks for the responses from the guests, we will continue with Part III
Everyone prepares their questions, the group will be unmute within 2 minutes for everyone to question the project
Part 3
Question 1:Is VELO a stablecoin?
Mr.Gaurang Desai:
No, the VELO token is not a stablecoin. But it is understandable why some people might think that, so I’ve chosen this question to help clarify the issue.
Firstly, the VELO token price can fluctuate on the open market. This makes it quite clear that it is not a stablecoin.
Rather, Trusted Partners stake VELO tokens to issue digital credits that are pegged 1:1 with any fiat currency. There can be digital credits corresponding to USD, just as easily as there can be digital credits corresponding to Euros or any other currency.
As the price of the VELO token fluctuates, the Velo Protocol (specifically, the Digital Reserve System) automatically balances things in the background to ensure that the right number of VELO tokens are backing the digital credit. This is why we often call the VELO token a bridge asset, as it links the values of various traditional assets to corresponding digital credits. Along these lines, as the Velo Network accepts more types of assets as collateral when issuing digital credits, the VELO token bridges the gap between all asset types, guarantees the value and liquidity of digital credits, and acts as the Velo Ecosystem’s universal collateral.
Question 2:It seems like Velo is trying to connect with entities that are already engaged in the remittance industry. Why would they bother changing their systems? They are already using a system that works for them and they can collect high fees.
Mr.Gaurang Desai:
The Velo Protocol is designed to complement and empower existing business and financial market participants. Collaboration with existing market players is a prerequisite to adoption. The reason for collaboration is two fold:
1. By leveraging blockchain technology and a federated finance system, the Velo Protocol helps traditional businesses significantly lower their costs and fees.
2. With the lowering of fees, institutions will be able to offer low cost financial services to the unbanked and underbanked populations which they were previously unable to service.
This is where Velo Labs has a clear competitive advantage over 99% of projects out there. As a result, Velo Labs has already secured several key partnerships with banks, MTOs and other financial institutions in the APAC region. A short list of Velo Labs’ partners includes the CP Group, Lightnet, SEBA, and Interstellar, just to name a few!
Question 3:It seems that this project is designed particularly for users in Southeast Asia where banking service is “not ideal”, do you think this project is competitive globally and why?
Mr.Gaurang Desai:
Quite simply, the answer is yes!
Outside of Southeast Asia, the global remittance market is still a system bogged down by high fees and low efficiency. The average fee for foreign workers to send money back home can be as high as 7%. In Africa, these fees often rise above 10%! The reason for this is that, in the current financial infrastructure, it remains very difficult to perform cross-border money transfers between different types of institutions and service providers.
Velo Labs’ technology allows for trustless and secure digital credit transfers that remove the excess of middlemen and service frictions from the current value transfer process. In our ecosystem, Velo Labs will enable any one business participant (aka. a Trusted Partner) to transact with any other business participant at any time and at any place once they become part of the Velo Ecosystem. This will allow businesses, migrant workers, and end-consumers to receive better services at a lower cost than provided by current offerings.
Question 4:”Stellar “ network was chosen by velo protocol ?Why did you choose stellar over Ethereum network ?
Mr.Gaurang Desai:
Currently, we are focusing on serving partners in the remittance and money transfer markets of Southeast Asia. This market is exceptionally large and can immediately benefit from the Velo Protocol.
In my opinion, one major reason why Velo Labs is poised to succeed is our backing. We have support from major conglomerates that are already engaged in the current financial system such as the CP Group, Lightnet and Stellar, just to name a few.
But I think we will be a true complement to the current financial system. We have conducted a real, deep analysis of the financial system to identify the real causes of friction, and we know which points of friction can be replaced without disrupting the industries that the financial system currently serves.
Our team members are not new to this industry, neither are our leaders and decision makers. We are not trying to exclusively service new players. We understand how the current financial system has historically been set up, and how it functions. We are all intimately familiar with the infrastructure that powers today’s financial system.
Because of our experiences and relevant industry background, we understand how the financial infrastructure works on a global scale. But just as importantly, we also understand the businesses that are the customers of the financial system. We understand how these businesses work, what their needs are, and where things can be improved. This, in my opinion, is where a lot of projects fail.
Additionally, Velo Labs is engaging with populations and ecosystems that are currently disconnected or otherwise encumbered by existing financial systems. So in these ways, Velo Labs is positioned to complement the current financial system — be it remittance and money transfer, payment solutions, lending, or otherwise.
Question 5:Can you explain in simple terms what a “Digital Reserve System” is?
Mr.Gaurang Desai:
The Digital Reserve System is one of the core components of the Velo Protocol. To put it simply, the Digital Reserve System is an automated set of smart contracts that manages the Velo Reserve Pool. It has several features:
1. The Digital Reserve System is responsible for ensuring a stable 1:1 price ratio between the issued digital credits and their relevant fiat currency.
2. The Digital Reserve System consists of three main elements: a collateral pool where Trusted Partners deposit their VELO tokens to receive corresponding digital credits, a reserve pool where reserve VELO tokens are stored, and a balancing mechanism to maintain a 1:1 price ratio between digital credits and their relevant fiat currency.
3. The Digital Reserve System achieves this 1:1 price ratio by automatically adding or removing tokens to or from a Trusted Partner’s staked collateral as the price of the VELO token fluctuates.
In other words, as the price of a VELO token increases, the Digital Reserve System will automatically take VELO tokens from the Trusted Partner’s collateral pool and add them to the Velo Reserve Pool. Conversely, as the price of a VELO token decreases, the Digital Reserve System will automatically take VELO tokens from the Velo Reserve Pool and add them to the Trusted Partner’s collateral pool.
I hope that is clear to everyone! You can always find a more technical explanation in our white paper at velo.org!
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