Agora’s Nick van Eck Is All-In on Stablecoins

Through extensive travels in numerous developing nations, Nick van Eck, the chief executive officer and co-creator of Agora, a company specializing in stablecoin issuance, has gained a keen understanding of the difficulties that currency devaluation and unstable financial structures can pose for citizens in these countries.

Using Agora’s primary stablecoin offering, AUSD, van Eck is dedicated to addressing the distinctive hurdles faced by countries such as Argentina and India. In a recent conversation with CoinDesk, he stated, “Stablecoins provide a means for individuals in these regions to securely store funds, alleviating concerns about inflation and capital restrictions. This straightforward yet groundbreaking tool has the potential to significantly impact lives, particularly when traditional banking systems are insufficient or lacking.

Van Eck possesses a rich history in tech investment and hails from a family deeply rooted in the gold industry. Notably, the fund company, vanEck (established by his grandfather), oversees one of the world’s largest gold mining funds. Recognizing Bitcoin‘s value as a form of savings early on, Nick van Eck allied with the values upheld by the initial Bitcoin community.

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Following a two-week vacation in South America’s Patagonia with his family, van Eck discussed the changing function of stablecoins within developing economies, the factors fueling stablecoin acceptance, and the distinct characteristics of the Asian market. Moreover, he explained Agora’s strategy for constructing blockchain payment systems and emphasized the significance of “credible neutrality.” Here is a slightly revised version of our conversation transcript.

After spending two weeks on a family trip to Patagonia in South America, van Eck shared insights about the shifting role of stablecoins in emerging markets, the forces behind stablecoin adoption, and the specific traits of the Asian market. He also outlined Agora’s methodology for creating blockchain-driven payment systems and highlighted the importance of “credible neutrality.” Below is a lightly edited version of our conversation.

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Van Eck recently returned from a two-week family adventure in Patagonia, South America, where he discussed the evolving role of stablecoins within developing economies, the factors driving stablecoin adoption, and the distinct qualities of the Asian market. Additionally, he outlined Agora’s strategy for building blockchain payment infrastructure and underscored the importance of “credible neutrality.” The following is a lightly edited transcript of our discussion.

Could you tell me about the path that led you from being a tech investor to founding Agora, and what initially piqued your curiosity about blockchain-based transactions?

From my youth, I harbored a dream of becoming an investor, which led me to kick off my career at JMI Equity in the private equity sector. In 2016, while engaged in hedge fund work, I was introduced to Bitcoin – a digital asset that struck a chord with my early understanding of “digital gold.” Sharing similar convictions as pioneering Bitcoin enthusiasts, I delved deeper into this new frontier but remained active in tech investment for several years more.

In the summer of 2020, often referred to as the DeFi season, my interest in cryptocurrency was rekindled due to platforms such as Uniswap and Aave demonstrating the concept of an open financial system. For numerous individuals worldwide, these resources surpassed their current financial systems. Blockchain technology offers opportunities for people to save and generate income in ways previously unattainable, sparking a sense of revolution. Approximately a year ago, I decided to part ways with VC firm General Catalyst to establish Agora.

How have your travels, including your latest trip to Patagonia, influenced your vision for Agora?

It’s truly a blessing for me to have ventured to regions across the globe where people don’t always enjoy the same level of financial access and opportunities as many Americans do. Places like Argentina and India, for instance, have shown me just how vast the world can be in terms of opportunities and obstacles. The concept of a savings tool that safeguards money from inflation is extremely valuable in areas like Patagonia and Argentina. My grandmother was an immigrant who endured a challenging upbringing, marked by hyperinflation, capital controls, and other financial hardships. In my travels, I’ve witnessed similar circumstances, even though I wasn’t personally present during those times. However, these experiences have made the harsh realities of financial insecurity feel incredibly tangible to me, going beyond mere intellectual comprehension.

What sets Agora and AUSD apart from other stablecoins like USDT or PYUSD?

Initially, let me clarify that we aim for unbiased reliability. To illustrate this, USDC divides its earnings with Coinbase, whereas Tether doesn’t have any partnerships, and PYUSD essentially functions as a PayPal subsidiary aimed at challenging various money transfer services. We operate similarly to a standard fiat currency – we receive a dollar, create one AUSD, and the original dollar is kept in a bank account. Since our inception, our goal has been to maintain a credible neutral stance and prioritize developing an exceptional digital dollar network without directly competing with our clients. We advocate for an open system that distributes revenue to the underlying applications or businesses utilizing AUSD.

Why are stablecoins so critical to the crypto ecosystem, especially in Asia?

As a researcher delving into the intricacies of the digital economy, I’ve come to realize that Stablecoins serve a vital role, comparable to the function of money in any conventional economy. In regions like Asia and Southeast Asia, where financial services access is limited and local currencies are subject to volatility, stablecoins provide a reliable standard of value.

What frequently gets overlooked is that Stablecoins are not solely for trading purposes; they facilitate wealth preservation, lending, and other financial services. For many individuals in developing markets, they present opportunities that traditional systems have failed to deliver.

What challenges do stablecoins face in achieving widespread adoption?

The primary challenge lies in regulatory issues. Businesses are eager to adopt stablecoins because of their cost effectiveness and speed, but they require clear guidance on legal and compliance aspects, such as identifying authorized service providers. Stablecoins have already made a mark in crypto-centric environments, yet there’s significant untapped potential in traditional sectors like international transfers and B2B transactions. I believe this is merely the commencement of a 20-year process leading to widespread adoption.

How do you see the Asian market shaping global trends for stablecoins?

In Asia, where there’s a significant need for cross-border transactions and easy access to U.S. dollars in trading, savings, or everyday transactions, the potential for stablecoin adoption is particularly high. Many Asian countries boast substantial wealth and high demand for U.S. dollars. Southeast Asia stands out due to its young, underbanked population who are constantly seeking more competitive financial services. With a smartphone at their fingertips, they can tap into dollar-based investment opportunities like Aave and other DeFi platforms without the need for traditional banking accounts.

How is Asia different from regions like the U.S. or Europe?

The primary contrast lies in the availability of U.S. banking services. Within the United States, financial services are widely accessible. On the other hand, stablecoins serve an essential role in Asia by providing a dollar-based financial instrument to individuals who lack access to conventional banking. Consequently, our emphasis is solely on markets beyond the U.S. In Hong Kong, you’ll find a robust financial system, but beyond this developed market, there exists ample room for improving financial products.

How do you see blockchain-based payments evolving over the next decade?

It’s likely that most international transactions will shift towards the use of stablecoins instead of traditional bank transfers facilitated by Swift, as we speak. Additionally, a substantial amount of foreign exchange trading is expected to take place on-chain. We are thrilled about our potential to contribute significantly in these rapidly developing sectors.