AMA with Martin Dyring-Andersen, CEO of e-Money

This AMA was conducted on September 18th, in the The AMA Room (Telegram: @amaroom). In this AMA, Eric of The AMA Room poses the initial round of questions to our CEO Martin, followed by a round of questions from the community.

Eric: So first introduce yourself to the AMA room community please.

Martin: Sure thing! My name is Martin, co-founder and CEO of e-Money.com.

To give a bit of background, I’ve spent the majority of my life in Copenhagen, Denmark where the e-Money company is also incorporated.

I’m 40 now, but since my early 20s I’ve been busy co-founding a wide range of tech startups, ranging from community-based spam filtering to algorithmic trading in the FX (currencies) market.

Eric: Wow. That is quite the range. Can you tell us how you discovered crypto?

Martin: Yeah, in 2017, after living a few years in Boston (USA), I came to realise that access to essential financial services, such as a bank account is far from a given outside of Denmark.

Around that time the Cosmos Network was doing a fundraiser, and I realised that the next generation of blockchain technology would be useful for real world payments, while it’s interoperability features could enable it to grow organically.

At that moment it felt like the pieces of a puzzle were coming together. I could combine my tech knowledge of currencies and trading with my interest in the blockchain space.

Eric: So what is e-Money?

Martin: To understand e-Money one should understand the difference between algorithmic stablecoins and currency-backed ones. Let me provide some context:

Eric: Explain further please

Martin: The pitfalls of algorithmic stablecoins are that they need something of value to base their peg on, which makes some of them a bit like pawn shops, while other models require ever-increasing transaction volumes to sustain value through fees. A less obvious pitfall is that they may actually have rather low liquidity. If an enterprise wants to use an algorithmic stablecoin to pay a large bill, they may exhaust the market for that coin before managing to acquire the full value needed.

The pitfalls of collateralized stablecoins are more obvious due to the relative simplicity of the models: The stablecoin needs to be anchored in a centralized, legal entity somewhere with all that this entails. Another pitfall, which has recently come on many people’s radar, is that having a huge amount of money in a bank account somewhere may not actually be a very good way to make money when interests are low or even negative.

At e-Money we’ve addressed the first of these pitfalls by making everything very transparent. We are an incorporated company in Denmark, which is a reputable jurisdiction with good regulatory oversight. Company ownership is public information. We have also contracted with one of the “big 4” auditing companies (actually, EY) to produce quarterly proof-of-funds documentation to demonstrate that the tokens are backed as advertised.

We addressed the second pitfall by making the tokens interest-bearing. Making them interest-bearing allows us to take a markup of 1% annually, much like a traditional bank.

In the current economic climate, this means that the interest will be negative for users of several of the currencies we issue, but when the economy gets back to normal, it means that users will gain interest on their holdings. It also has several nice side-effects: fees can be kept very low on all transactions and tokens can be used outside the e-Money chain, since we do not rely on these fees.

Making our tokens interest-bearing means we can support all currencies, which empowers users as they can diversify their holdings.

Eric: So what is the token’s role in all of this?

Martin: We have two tokens in our model. The stablecoins (eEUR, eCHF…) and the NGM staking token.

The NGM is a staking token similar to the Cosmos ATOM. It helps secure the e-Money chain through staking.

The NGM token comes with 3 kinds of rewards/benefits:

Staking rewards from inflating the NGM supply by 10% per year (similar to ATOM)

Transaction fees (similar to ATOM)

Buy-back of NGM tokens based on stablecoin inflation by 1% per year (unique to e-Money and all currency-backed stablecoins that I am aware of)

This “3 layer cake” is probably best illustrated by this deck: https://e-money.com/documents/e-Money%20Token%20Rewards.pdf

In short, the NGM both secures our chain but also thrives as the issuance of our stablecoins grows.

Eric: What have you done so far in terms of development?

Martin: For a project of our kind, there are more than one kind of development as it is not solely about software. First of all, we’ve spent years (!) and a small fortune talking with regulators, lawyers and banks to get to where we are today.

Development of our core technology is finished, and our mainnet launched in March of this year with strong support from our 40+ validator community. We have an explorer running on https://e-money.network/.

Following the mainnet launch, we’ve issued our first batch of EUR, CHF, SEK, NOK and DKK tokens to demonstrate the capabilities of our platform.

Our software is based Cosmos SDK and Tendermint based, which means proof-of-stake and instant finality. And it’s been audited by Certik.

Apart from providing stablecoin functionality we also have an DEX on chain, implemented as a limit order book.

We’ve made the DEX competitive since there are no listing requirements, no execution fees and it is optimized for liquidity providers. We’ve also designed it with end users — “takers” — in mind, as it features sophisticated order matching to ensure they always trade at the best available price.

That being said, there is plenty of planned work to be done: Wallet and exchange integrations, on-boarding flow for new users, bridges to various blockchains, on- and off-ramps etc.

Eric: How does the DEX fit on the plan to offer a better stablecoin?

Martin: Following the conclusion of our private sale, we’re doing our first mainnet upgrade, which is expected in early October, and will adapt the mainnet to our revised token model.

The idea is that we want to provide a great user experience. So if you hold eEUR on your account, but happen to be in Switzerland — you can do a payment that includes an instant EUR -> CHF conversion.

Eric: So it’s a DEX for forex. Why did you choose Cosmos over other blockchains?

Martin: Exactly.. We don’t plan to compete with some of the DEXs built by existing exchanges, but we do see it as a great value add.

The Cosmos stack has several advantages: It did away with proof-of-work and replaced it with the far more sustainable proof-of-stake paradigm. It also provides instant finality, ie. once your transaction is in a block it will not be reversed, which means a farewell to long confirmation times.

(This is a MUST for payments)

Finally, we see the promise of blockchain interoperability as the future, where an ecosystem of blockchains will exchange value. Cosmos’ IBC is a very strong contender for providing this, enabling “credit transfer” of tokens, which is conceptually identical to a traditional bank transfer.

This means value can now be moved freely across chains without the need to do an “atomic swap”, a comparatively inefficient process requiring the exchange of tokens coordinated on two chains at an agreed upon price.

While the e-Money chain is built using Cosmos technology, I want to point out that we expect to support more networks through bridging. We are currently considering Polkadot, Avalanche and Ethereum integrations in the not too distant future.

Eric: How much did you pay for your domain? :)

Martin: I wouldn’t say “too much” but “a lot”.

COMMUNITY QUESTIONS AND ANSWERS

Q: You mention that you launched your main net in March 2020, and with 40 validators, very impressive! But to be honest (and I don’t mean this negatively), I’ve never known about e-Money up until a couple of days ago, and that was by random chance on Telegram. In your Telegram I’ve seen you state that next to no marketing has been done yet.

Are you planning to ramp up the marketing soon, and can you give a bit of detail about some of your plans?

Martin: Good question. As mentioned above regarding development, the tricky part of our project is regulatory/banking and finding the appropriate token model. We decided to “go silent” until we solved those hard problems, but got some great help onboard recently.

Our marketing activities basically started with this AMA and I’m very confident in our marketing team. Innovion is taking care of our marketing and they have impressive experience and reputation. Recently, they’ve helped Plutus Defi, DIA Data, OIN, RAMP and many others.

I’m sure you’ll notice an increase in our marketing activities in the near future.

Q: Security and audit are of utmost importance for any platform. What measures have you taken to ensure users are safe while using your platform?

Martin: Code has been audited by Certik and we are using Ernst&Young to provide proof-of-funds. A cornerstone in any currency-backed stablecoin project is trust and transparency.

Q: What are your Anti-Money Laundering and Anti-Terrorist Financing rules?

Martin: We are fully compliant with KYC/AML regulation. This means that when users buy or sell stablecoins against fiat, they must submit to KYC/AML checks.

Stablecoin tokens (onchain) are not subject to KYC/AML.

So the user experience of dealing directly with us to exchange stablecoin/fiat is very similar to dealing with a regular exchange.

Q: How secure is the e-Money protocol in terms of coding and funding?

Martin: See code audit (Certik) above. Funding wise, the private sale will secure operations for the coming years.

Q: There are many stablecoins, but what is e-Money’s main advantage over other stablecoins?

Martin: We can support any currency (not just positive interest), so there is a much larger user base and a much wider range of applications.

Also ideal for replacement as savings-account since it is interest-bearing. Users get a multi-currency wallet on chain for free and can diversify/hedge currency exposure.

Q: Why have you decided to launch your own blockchain? How is its fair and efficient operation guaranteed?

Martin: Having our own blockchain allowed us to implement things such as dynamic blocktime, which is an important factor in delivering a great user experience, as well as a built-in DEX that will allow us to provide currency exchange services.

In the longer term, it will also enable us more freedom to make integrations with other blockchain platforms, e.g. Avalanche or Polkadot.

The operation is guaranteed by the community of high-quality validators that we have managed to assemble. We are fortunate that many validators, with great operational track records from the Cosmos hub and others, decided to join our mainnet in March.

Q: e-Money claims to be backed by collateral in the form of bonds. My question is, do you have a guarantee that the bonds are trustworthy? Junk bonds currently exist. Thank you guys👍

Martin: We’re only buying government bonds without exchange rate risk (so same currency as token).

Q: What is the role or participation of the community in the development and future of e-Money?

Martin: Our choice to tokenize the income that the stablecoins generate, allows us to expand and include the community around the project. This means that we have a tool to incentivize partners such as exchanges, networks, projects, content creators, developers etc. We plan to take full advantage of this to build our community, and have set aside a pool of NGM tokens for exactly this purpose.

Q: Can you list 1–3 Killer features of e-Money that makes it ahead of its competitors? What is the competitive advantage your platform has that you feel most confident about ?

#emoney

Martin: Our token model supports any currency (not just a USD token) -> much wider range of applications. Our own chain enables us to do near-instant payments at low cost, at scale. Required for real world adoption. The ecosystem (Cosmos) enables organic growth across chains.

I also believe we have a unique incentive model for partnerships, as our stablecoin success can be passed on to partners through the NGM token.

Q: What is the most ambitious goal of the project? I would appreciate it if you could share with us any upcoming updates? What should the community look for?

Martin: Our long term vision is strong adoption outside of the crypto sphere. We’re just getting started and envision a future where everyday people can quickly setup a network account instead of talking to a bank.

Merchants can eliminate credit card costs and boost their liquidity as payments settle immediately.

The remittance space is really crowded, but it seems a no brainer that our platform can be used for this as well, once we establish enough “local presence” in more currencies.

It’s obviously a long — but very exciting — journey ahead!

Q: How often are the audits provided by Ernst & Young?

Martin: They will be provided on a quarterly basis. E&Y are creating the first of these as we speak (well, type) as a pilot.. And then they will arrive on a regular basis.

Contrast this to Tether which has some documentation dating back to 2018. Ouch.

Q: Could your tokens be fully secured and give 100 percent confidence to users? Are they secured in the same way as deposits and government bonds are held in commercial banks?

Ans: No, tokens do not represent a deposit and there are no depositors guarantee associated with the tokens.

The value of the tokens are substantiated through transparency (proof of funds and on-chain data).

Q: I’ve been looking at your previous experience and pretty impressed with the different projects you have been involved in. I am wondering if you are solely focusing on this project or will be working on multiple projects.

Martin: Thanks. Yes I am focused on this project as I find it challenging, having a lot of potential and also exercises all the right parts of my brain.

I do find the DEX and trading aspects of the projects particularly interesting, but we do have a lot of exciting integrations coming up as well 😄

Q: What is your vision for e-money in 1 year from now ? How does the e-Money platform generate revenue for project development?

Martin: The company behind e-Money.com has a treasury of NGM tokens. These will be staked and will generate staking rewards in the form of more NGM tokens. We can finance operations by selling a small part of these.

Q: How do you coordinate the next generation banking system for Global Payments with a single blockchain layer? How did you build a bridge between the blockchain ecosystem and the banking system?

Martin: By focusing on a small (but hard to solve) part of the puzzle. We’re not looking to build our own blockchain tech stack, but “just” acting as a bridge between traditional banking (fiat) and crypto (stablecoins). For this to work for all fiat currencies and at scale, you need some secret sauce in the form of a good token model, regulatory exploration, banking relationships etc.

Eric: What’s the long term vision?

Ans: The long-ish term vision is to become a “real world” value plugin that other blockchain projects can adopt to support their own projects. We are in talks to integrate with several of the upcoming blockchain networks.

The long term vision is to be able to support a future where blockchain payments have entered the mainstream, and people are using apps for payments and only being vaguely aware that there is a blockchain running in the background.

To that end, our blockchain operates with dynamic blocktime, where a block is created as soon as a transaction is waiting to be committed. This provides for very fast transaction finalisation (usually in the order of 500ms), which provides for a user experience that can compete with in-store credit card payments.

Q: What criteria is employed in selecting stablecoins to integrate into the ecosystem and why do you have an INFLATIONARY TOKEN MODEL, how do you ensure that all 10% inflation are distributed equally #emoney

Martin: Long term we want to support all major currencies (G10) but we decided to start in our own backyard with the European ones. They are also particularly tricky as they are typically zero/negative interest rate and have not been tokenised in a scalable manner yet.

Q: My question for the @emoney_com and @theamaroom AMA at https://t.me/amaroom: In crypto, many projects were dead and core team members left projects, which has a negative effect on crypto projects! How can we trust e-Money? What makes you not a scam and a long term working project?

#emoney

Martin: I believe our track record so far speaks for itself. We self-funded in 2017 and have been working tirelessly since then off of those funds. We’re not raising crazy amounts of money, but a more measured approach where we don’t sell more than we need.

Q: You claim to comply with AML / CFT legislation, does that mean that I need to do some kind of KYC to operate with eMoney stablecoins?

Ans: If you want to buy or sell stablecoins directly with us, we’re obligated to do KYC/AML checks on you as a customer as we are engaging in a fiat/crypto trade. Once you have your stablecoins in hand, you can do with them as you please. There is no on-chain KYC.

We are AFAIK the only currency-backed stablecoin project that tackles the interest rate problem head on.

Q: Can all banking functions be provided in the blockchain? Can cyber risks in the blockchain affect the system?

Martin: With great power comes great responsibility. So for self sovereign systems, where you control your own key and account, one must make sure that the keys are kept safe. 🙂

I believe many wallet providers are working to create a better user experience for this, encouraging key backup and certain security measures as the account value grows.

Q: How will you manage to ensure stable and low transaction costs?

How will you profit by both providing a low wage system?

Martin: So e-Money is not a low wage system actually. Even though the transaction costs a miniscule, the token holder pays 1% per year as the stablecoin supply is inflated. A good way to think about this is that instead of paying 1–5% for each individual transaction (credit card payment), the user pays a fee via the 1% stablecoin inflation per year. A model such as this is required in the “connected blockchains” world, where there are no guarantees that we will participate in transactions and earn fees on them.

Q: I would love to know why e-Money chose Cosmos in particular, given the array of options amongst blockchain SDK’s ?

Martin: Decision to go with Cosmos was made in 2017 due to instant finality, reasonable scalability and interoperability (IBC). Given time more options have obviously appeared, but so far we are happy with basing our mainnet on Cosmos.

(in short it was from our perspective the first tech stack where our stablecoins could thrive)

Eric: Ok. thanks for the time

Martin: Thanks for having me — it’s been a pleasure. And thank you everyone for the thoughtful questions!