April 4, 2020
Transact Freely with Terra

Transact Freely with Terra

Hi, I am Daniel Shin from Terra. Happy New Year! Interestingly enough, I met my co-founder in January 2018 and started Terra. That was the peak of the crypto market, and prices have been falling ever since. While we were getting ready for Terra, we saw Bitcoin’s price get halved repeatedly. So nowadays, a lot of my friends ask me: “Are you okay?” It’s as if they are asking whether our business is surviving the financial crisis. Thankfully, myself and everyone at Terra are okay. That’s probably because this crash was somewhat expected. I looked at the most popular dApps on EOS and Ethereum, and I couldn’t find one with more than 10,000 users. But these platforms were valued at billions of dollars, so it might make sense that their prices fell. And if you go back to January 2018, when Terra was getting started, 43 projects were valued at over 1 billion dollars, with the crypto market valued at almost 1 trillion dollars. But it’s extremely difficult for a startup to reach a 1 billion valuation. Think about Airbnb, Slack, Spotify, and Snapchat. I think these are companies that looked for real problems customers are facing and tried to solve them in unique ways. And they went through Series A, Series B, and Series C to reach that 1 billion dollar valuation. That’s why they are called Unicorns. It’s hard to find companies that can reach a 1 billion valuation, but as I said, 43 new projects with just a white paper were able to reach a 1 billion valuation. That was last year’s crypto bubble. Think about the customer first. That’s one of the most basic principles in business. Walmart’s founder Sam Walton said, “Focus on something the customer wants, and then deliver it.” Steve Jobs also said, “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” Jeff Bezos said, “Focus obsessively on the customer.” They are all saying the same thing. Of course businesses need to find problems customers are facing. But the crypto industry never had the opportunity to meet the customer. Since most dApps don’t have 10,000 users, they never had a chance to get user feedback and further develop their product. So at Terra, we focused on what problems we could solve, and our goal is to become the first crypto service widely used by mainstream consumers. Let me take a moment to introduce Terra. Terra is a blockchain payments solution. It’s similar to AliPay from China and Stripe from the U.S. To put it simply, Terra rebuilds the payment stack on the blockchain. Top eCommerce companies in Asia are joining Terra in search of a better payment solution. So they have joined the Terra Alliance prior to our product launch. Terra is launching with 15 eCommerce platforms that collectively generates $25 billion in annual transaction volume and has 45 million users. We really paid attention to what our client’s pain points are. For instance, every year, TMON pays out about $100 million just in transaction fees. They would like to reduce this operational cost. Baemin would like to expand their food delivery services to other countries, but they are struggling to find the right global payment partner. A popular Southeast Asian C2C platform called Carousell wants to provide safe escrow services to their customers. And Southeast Asian Fashion commerce Pomelo talks about providing more financial services to their users. So we’ve designed Terra’s payment system through these feedbacks from our clients. There are three main differences. First of all, payments tend to be limited to certain regions, but Terra is able to provide a global service. Secondly, the digital payments market is extremely crowded with undifferentiated products. These products might have minor differences in terms of convenience, but they aren’t really different from each other. Terra has designed a unique system that can provide consumers with real, sustainable value. Last but not least, we’ve significantly reduced transaction fees, which normally range from 2.5% to 3%. Let me explain these three points in more detail. Take a look at all of these payment methods that currently operate in Asia. There are many more than you see here. Most of these payment methods are only used in their relevant country and nowhere else. However, Terra layers its payment system on top of a stablecoin economy, which is powered by blockchain. And a stablecoin is a digital currency without borders, so Terra can become a universal payments system. So if you are an eCommerce platform in Singapore, we can charge a Thailand consumer in Baht and a Vietnam user in Dong, and then settle in Singapore dollars. This is what a global payments solution should be able to do. The second point is about consumer discounts. We thought a lot about what our customer value proposition is. At the end of the day, we thought that offering the lowest price through discounts would be most impactful. And we found a way to provide consistent discounts to our users. So how can we do that? The answer is in our stablecoin token economics. Our stablecoin has a flexible money supply. So if transaction volume increases, the overall demand for the stablecoin also increases, and we must increase Terra’s money supply. If transaction volume and demand decreases, we must decrease Terra’s money supply. So if a new eCommerce partner starts accepting Terra and transaction volume increases, in order to keep the stablecoin’s price stable, we increase the overall money supply. We use that increased money supply to fund consistent consumer discounts. So if you go to your favorite eCommerce platform and you choose Terra as your payment method, you will be able to receive a 5%, 10% discount on every purchase. The last point is about cost. Payments are not simple. They usually involve 6 or 7 different steps. There’s the card-issuing bank, and then there are fees that go to global networks like VISA and MasterCard. Then there’s the PG and the VAN company. Credit card transactions are expensive because all of these players take a fee. Terra utilizes technology to reduce these unnecessary steps. And we are looking for ways to provide up to 80% savings on transaction fees. At the beginning of this keynote, I might have sounded rather pessimistic. But those stories only point out that there was a crypto bubble. I am a strong, long-term believer in blockchain. Why? Because industries that blockchain can truly reform have so many problems. If we look at the finance industry, we can blame regulation and incumbents, but this is an industry that hasn’t changed for decades. We want to revolutionize these industries, but we can’t run with our hands and legs tied. Then you might ask, “Don’t we have a lot of innovative fintech companies?” But I think it’s hard to say that these fintech companies truly revolutionized the industry. They did change the UX and design to make it easier for consumers. They’ve simply wrapped a new UX around the current financial infrastructure. There are 6 steps to process a payment, and fintech companies added an additional UI/UX layer on top of this already complicated process. They weren’t able to touch the underlying infrastructure. But with blockchain technology and cryptocurrencies, it is possible to start removing each step. That’s why I believe in blockchain. I think there are a lot of “hidden taxes” besides those that we pay to our government. There’s that 2%, 3% transaction fee that occurs every time we use a credit card. Of course, consumers don’t directly pay those fees, but platforms bake those fees into the retail price. Transaction fees are a tax consumers eventually pay. 7% fee to exchange money. 15% fee to borrow money. These hidden taxes come in various forms. Maybe it’s not so surprising to see zero in your bank statement. So what is Terra’s mission? Transact Freely. To date, financial institutions thought about how to increase their margins and incur higher fees. But Terra will utilize blockchain and cryptocurrency to remove unnecessary middlemen and reform our financial infrastructure, so consumers can move their money around in a more efficient and cheaper way. Thank you.

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