Michele D’Aliessi from Superfluid on Streaming Payments

[00:00:00] Umar: Welcome to The Accountant Quits, brought to you by Request Finance, an all in one platform for crypto organizations and freelancers to easily manage and track their invoices, salaries, and expenses in a compliant way.

[00:00:15] Umar: On this podcast, we discuss how blockchain will impact the accounting profession and how accountants should prepare themselves for the future of work.

[00:00:23] Umar: My name’s Umar, your host, and even if some might refer to me as the accountant gone rogue, my job is to provide you with the blockchain knowledge you need, that will be relevant for the accounting industry as a whole.

[00:00:37] Umar: Welcome to Episode 31, where we introduce the concept of payment streams. Payment streams you ask? Allow me to break it down for you through a simple example. As an employee or freelancer, you’re familiar with receiving your salary or fees in the form of a lump sum transfer.

[00:00:54] Umar: What if I told you you could now receive crypto payment every second in the form of a payment stream? Today I have the pleasure to have Michele D’Aliessi, co-founder at Superfluid. Superfluid is pioneering the idea of programmable cashflows, or simply put, allowing a constant flow of transactions that are executed automatically on chain. Payment streams would be impossible to do in traditional finance and have the potential to change how money works.

[00:01:23] Umar: In this episode today, we will learn what is Superfluid and how Superfluid works, the use cases of payment streams, DeFi opportunities when receiving salaries through payment streams, the booming Superfluid ecosystem, accounting for payment streams, and much more.

[00:01:42] Umar: Michele, welcome to the show, I’ve to say I’m really excited for this episode today.

[00:01:47] Michele: Hey Umar, thanks for having me.

[00:01:49] Umar: To start, I always like to ask my guests, if you could share a bit of your personal background, how you became interested with blockchain and the story that led up to founding Superfluid.

[00:02:00] Michele: Sure with pleasure. So, you know, I’ve always been very much into engineering in itself, and tech entrepreneurship.

[00:02:08] Michele: So when I was just graduated, I did a documentary about startups that brought me across Europe and San Francisco, the Silicon Valley area. And then I was working for a tech startup in the robotics sector. And then I moved to London to work at the European Institute of Technology, where we were mostly researching tech trends and investing in high growth, high potential ventures.

[00:02:28] Michele: So in 2015, I landed in London and I was exploring all the deep technology ventures out there and old and new technology trends. And, you know, I heard about Bitcoin before. But I was not really paying attention to it at the time. And it seemed to be more like, you know, magic internet money without a clear future.

[00:02:48] Michele: But then, you know, in that year I started learning about Ethereum. It was really just getting started at the time. And, you know, there was something about it and specifically the programmability of a decentralized global computer that was making it very interesting to me because for the first time in history, we could run applications on something that was decentralized and distributed, which could leverage, you know, economic incentives or incentives at large to drive mass action at scale.

[00:03:18] Michele: So it was a, basically a novel coordination platform to drive human extra and in the interest, hopefully of humanity and the planet in a way. So when I stumbled upon in 2016, I basically started kind of falling down the rabbithole and learning more and more about Ethereum and the ecosystem around it, all the developers that were contributing to this kind of open source, open platform.

[00:03:45] Michele: That to me sounded like Linux in the early days of the internet. And yeah, it kind of got to me in multiple ways. One was kind of the social element of it. The other one was the economic one and financial one, but also the technological one, you know, looking at encryption and distributed computing, all those elements were fascinating to me and especially to the engineer side of me.

[00:04:09] Michele: So I got really into that at the time I stayed in my job for quite a while. I was investing in startups as an angel as well. So I was investing mostly in FinTech at the time. And then in summer 2019, I went to a conference in Berlin. It was Berlin Blockchain Week and at a hackathon, where I met Francesco Renzi, it was together with Miao, he was building project called RDAI, which was a way to decouple the interest that compound was eating out on top of DAI with CDAI and send that interest to another wallet rather than your own. So normally when you invest in Compound, you would accrue interest on your own wallet. With that system, you could accrue interest on your wallet, but then you could decide to direct that interest to someone else, right.

[00:04:57] Michele: So you could effectively have that interest accrued in real time to another wallet, which really sounded like a sort of real time payment, you know, in a stream. So, you know, we’re building on this idea and thinking about you know what that could become and what that would evolve. And overall, this was just a small component that was kind of part of the big puzzle of what led us to then build Superfluid. But we realized that also in the blockchain sector, there was a lot of kind of financial speculation or a casino obligation that was like a lot of play and fun, but there was no real business. There was no real economic exchange. There was no real, you know, B2B services and industry in general.

[00:05:37] Michele: So we were wondering like, do we want this technology to become the backbone of a financial system that will run on a centralized network that could be global and fair to all different participants. And if so, then we needed business to come on-chain. And so Superfluid was born with the three of us discussing these topics and realizing that we could build financial rails effectively, a whole new financial primitive.

[00:06:04] Michele: That would allow value transfer in real time between parties at a very low cost and only the cost of deciding upfront how much value would transfer from A to B in a kind of constant fashion. So you don’t have to send, you know, if you want to send, say $10 every month to a software provider, you kind of engage in that agreement on day one.

[00:06:29] Michele: And then your relationship maybe ends two years later when you don’t want to be on this service anymore, but there is no reason why along those two years, you would have to transact every month with that player. It should be something that starts when you actually begin the relationship and continuous ongoing fashion until you stop.

[00:06:49] Michele: It is just because of the limitations of our existing financial system that we are paying every month, just because it would be to say complex to do it in real time. And also to account for that. So it is kind of natural for relationships between humans or between businesses to have a beginning and an end.

[00:07:07] Michele: And that along the way, you would ask to have a value transfer as much the other side would do a service transfer. So that’s what got us very much excited at the time. And here we are two years in the journey we started at Superfluid.

[00:07:22] Umar: Wow. I think it’s also, as you said, it’s a paradigm shift that people have to go through.

[00:07:28] Umar: The first time I used Superfluid was through Rabbithole. So Rabbithole, like had a skill there and that’s how I used Superfluid and I was blown away by the fact that I could receive like payment every second. I couldn’t believe it. And also the fact that there’s no transaction costs, there’s only a transaction cost when you initiate like the stream, but then there’s, there’s no transaction cost throughout the payment stream.

[00:07:51] Umar: So I want to ask you maybe for the listeners who have not yet used Superfluid, could you briefly explain how Superfluid works?

[00:08:00] Michele: Sure. So Superfluid is an asset streaming protocol that enables subscriptions and salaries and ongoing payments in Web3. How it works is very simple. So you wrap tokens into a Superfluid standard, which enhances the capabilities of these tokens. And once, these tokens are wrapped on a one-to-one fashion to the existing source token, you can actually start streaming now.

[00:08:23] Michele: That works by doing one transaction on chain. So you just do one transaction that opens the stream. You just need to set who is going to receive it. So the address of the recipient and the amount that is flowing on a per second basis or per month basis, but keep in mind the constant flow is per second anyway, and that will continue running until you either stop it or run out of funds.

[00:08:45] Michele: In the meantime, you can always add it, the amount that you’re sending. So let’s say for example, a subscription changes from $15 per month to $18 per month. You can still edit the stream. And the good thing about this system is that is a push payment. So, you know, it’s not someone taking the money from your wallet or your credit card, but it’s you actually sending the money to a provider.

[00:09:06] Michele: So there’s a lot more control in that from the user side. So the good thing about Superfluid is that it’s not meant as a service. It’s meant as a protocol. And so it has been built with the nature of composability and programmability, catering to anyone in the world who is a developer, and want to build an application or a businessman who has a project to come to life could just use this token standard or primitive to build their applications.

[00:09:35] Michele: And leverage this kind of real-time value transfer capabilities that the blockchain technology seems to have unlocked for the world. So, you know, how most of the users are using it at the moment is they are using the code base, which is also open source and is freely available to build their own projects on top, which is somewhat fascinating.

[00:09:57] Michele: And yeah, we can dive deeper into the use cases if you’d like to, but that’s kind of the 101 of what Superfluid is.

[00:10:03] Umar: Before we dive into what folks are building on top of Superfluid or, yeah, you can tell us now, but I wanted to touch on some of the real world use cases In the introduction, I said that people can now receive their salaries in a payment stream. For people to have a better understanding of the other use cases that can be leveraged on top of Superfluid, I read like subscription, Dollar Cost Averaging is like the popular ones described in there, could you give us a bit more information on these use cases?

[00:10:37] Michele: Of course. Yeah. So, I mean, every time you have a recurring transaction with a fixed amount, that’s when streams have the best fit. So you wouldn’t use streams for example, to pay for the grocery shopping that you have done on a Thursday afternoon after work, but you would very much do use a stream to pay, say a gym membership.

[00:11:00] Michele: So, you know, one of the clear use cases are subscriptions, especially B2B or B2C subscriptions, which tend to have a stable amount for a fairly long time. But also things like you know the internet connectivity subscriptions you have for your home. The other major use case are, say salaries or stable relationship payments, even between suppliers and customers.

[00:11:25] Michele: So we have seen a lot of usage of streams in the DAO industry because they want to pay contributors and these contributors are paid either in stablecoins or tokens that are distributed over time, in a stable fashion. Basically just like a salary. Another one use case which have seen quite a lot is vesting.

[00:11:44] Michele: So when you have a token vesting, you can lock up the funds and then release them in a stream. So that we can clearly see. However, these are kind of just the very basic use cases and what is kind of one level above that is for example, looking into DeFi. So if you look into the financial applications of this real-time value transfer, we have seen applications like Ricochet that builds a real time exchange in streams. So what they allow you to do is they allow you to stream say a stablecoin and use that stream to purchase any other assets, say ether in this case in a real time fashion. So the, as you stream your funds are used to purchase the token you want, and then send it back to you, which is in this case, it’s kind of the ultimate dollar cost averaging strategy.

[00:12:39] Michele: Because you have exposure in an almost real time fashion to that asset. So this kind of financial applications are very interesting. And let me explain you why, so suppose you are a DAO contributor and you are paid in a stream. Now you receive, let’s say $10,000 per month in DAI or USDC or some sort of stablecoins. But you don’t want to receive stable coins maybe because inflation is eating into your assets.

[00:13:09] Michele: You want to invest say 20% of that. So now you’ll receive a stream of 10,000 DAI or USDC, and then you decide to open a stream of 2,000 DAI to Ricochet, and that buys you Ether or Bitcoin in real time. So now it is as if you were paid directly in the asset that you’re buying, but there is more to it because if that asset that you’re purchasing is some sort of yield bearing asset.

[00:13:38] Michele: So for example, Idle Finance Ether, for example, right. When you’re buying it, that means that as you are getting paid, your salary, your funds are compounding in real time. So now you don’t have to wait the end of the month to put your savings at work and leverage your capital to build an interest, but you do it as you are working.

[00:14:02] Michele: So you see here, the paradigm shift is that everything becomes liquid and fluid or seamless in a way without the queuing or without the waiting or without the friction of transaction where you don’t have to wait until the salary comes to you. To then put it at work to make it to compound. You can just leverage it as it it’s arriving to you in real time.

[00:14:26] Michele: So that has very high benefits for the investor or the user, I would say. And then the last wave of use cases are in the kind of nascent ecosystems. One of them is the NFT one. For example, you can latch a stream to an NFT, such that if the NFT changes hands so sold to another wallet, the stream follows automatically.

[00:14:50] Michele: So imagine you are owner of some land in Decentraland or a parcel of land in a Metaverse. And that Metaverse land is an NFT by assumption. If you’re renting it out to someone, to a tenant and he’s building something or making some good use of your land or putting some billboard advertisement, whatever.

[00:15:10] Michele: And that rent comes to you as a stream to your NFT. That means that you can sell your parcel of land. And when you do, you don’t even need to warn on your tenant because the rent will transfer to the recipient of the land. When you send that NFT over. So there is also no administration or cognitive effort into managing these relationships.

[00:15:32] Michele: We have to say, okay, stop the payment to me, the new owner is x. You need to send a payment to that new owner. Another major use case is gaming where, you know, you can have in game asset or resources, that you can pay in a stream or that can come to you in a stream, for example, if you were to stand by a fountain in a Metaverseor in a game, and by standing there, you would mint effectively H2O tokens because water is coming to you.

[00:15:59] Michele: That could be not as a one-off transaction, but actually as a running stream of water, that is tokenized. So you could see like how resources could play a major use case in streaming in gaming. So this has kind of just a short overview because we have seen way more, but those are really making us excited because it’s literally just a surface.

[00:16:22] Umar: Wow. I’m really blown away by Superfluid, like preparing this episode and just speaking to you right now. I really think Superfluid will change the whole world of finance and just, I can keep listening to the use cases and my eyes are just opening bigger and bigger.

[00:16:39] Umar: I want to stay a little bit more on the topic of salaries and just maybe have a better understanding of how do you explain it to be a win-win for both parties. I understand it’s great for the receiver. How do I go and explain my employer that instead of receiving my salary as a lump sum at the end of the month, now I would like to receive it as a payment stream, so continuously.

[00:17:02] Michele: Well, there are pros and cons, I would say for both parties, for the receiver, it’s clear that, you know, you’ll get your salary in advance. So it’s almost like payroll financing, if you will, where you can do that. And also, you know, it is a different type of payment where, for example, if you were to consider a milestone project, where you only want to release a payment when a milestone is received, then a stream doesn’t really fit the purpose, I would say.

[00:17:30] Michele: But for ongoing relationships, like for example, that of an employee or contributor to a DAO, it makes sense that you are paid as you work.

[00:17:39] Michele: Because then if you don’t, basically you are taking on the risk of providing your time and skills and value without, you know, the possibility from the other side to actually get paid for those that you already provided. So for example, the company can go bust or it could be a lot of other complications where you don’t actually get paid.

[00:17:58] Michele: And I’m sure that if you ever been in the contractor world, this happens quite a lot. So what’s in it for the kind of other side for the ones that are paying. Well, first of all, you know, if you have a user base or collaborators that value this idea of being paid for the time to spend working at your project.

[00:18:21] Michele: I would say that is somewhat of a very strong add on that is a benefit that others can’t provide. You know, this idea that you worked for our organization, because we pay you in a stream in real time is, is a very powerful one because it’s shows a different type of commitment and also trust kind of receiver. So, that is one.

[00:18:45] Michele: However, I would say that the major gain that is actually an economic one is you are basically missing out on this 30 days of cashflow that you would have to potentially leverage in the financial sector. So you need to make your math well against that. But I would argue that the more streams you have with the more collaborators or employees you have, the better it scales because the cognitive efforts needed to manage transactions on a monthly basis is fully removed in favor of a fully automated system, which is fully auditable as well. So there is no need for you to process payroll, to like a thousand employees every month, because you only need to care about those that you are onboarding, firing or promoting. So you only need to care about the changes in the status quo and not the status quo itself. So for a massive organization, this kind of admin cost, that kind of disappears entirely with ongoing payments in a stream can easily outwait the cashflow gains that the organization could do on the amount of money they are paying their employees, especially if they see that as a clear commitment and as a benefit that they provide to the workforce.

[00:20:06] Michele: So I would argue that, you know, depending on what their organization does and what type of interest is able to obtain on capital for such a short term of cashflow, I would argue that it is there interesting as an economic decision as well from the payer side. There is more to that, which if not only the kind of payouts are in stream, but also the revenues are in streams.

[00:20:30] Michele: Because for example, you are a DAO or you are some sort of Web3 subscription service. And you’re receiving, you know, income in a stream, that is kind of an ideal situation because then it really is everything in autopilot. Like you don’t even need to touch anything and it just runs and guess what, it runs gasless on-chain with no engagement needed from your side. As soon as you tune the system, it kind of keeps running by itself, which is a very powerful automation in the operations and administration of larger organizations or things like DAOs.

[00:21:08] Michele: Because especially when you bring in things like cold wallets and multi signature wallets, everything, every change that you need to make to the system is very expensive because it might require multiple parties to sign transactions for a security point of view. So, you know, the less changes you need to make to the system the better it is for these players. And if it’s fully automated, you really need to focus just on the edits or the changes in it to make because someone is leaving or joining your organization, or someone got a promotion.

[00:21:43] Michele: So like, you know, it is hard to comprehend from the world we are living in today, where you need transactions. You need to know at the end of the month, how much, you know, the person is getting, but you know, in that world of Web3 where it’s all native, it does make a lot of sense.

[00:21:58] Umar: I want to touch a bit on the ecosystem of Superfluid. Like I said to the listeners Superfluid is an open source protocol. Anyone can build on top of Superfluid. So I read that there’s more than 200 projects that’s been built on Superfluid since the protocols launch and like a 100+ in 2022 alone. So it’s growing & it’s growing really fast.

[00:22:21] Umar: What I like with Superfluid is I see you guys participating in many hackathons and you reward the projects with the best use cases. while preparing for this episode, I was looking at the projects who won the hackathon in ETH Amsterdam, and there’s a lot of amazing use cases coming out of ETH Amsterdam, could you speak a bit about the projects being built on top? You mentioned Ricochet, some of the other noteworthy projects being built on top of Superfluid.

[00:22:48] Michele: Absolutely you are right. When I was introducing the protocol before I was mentioning, that it has been thought for builders and developers, with the idea that is a programmable system. It’s like a Lego box that anyone can use to build their own application in a custom way.

[00:23:04] Michele: And so we have been mostly engaged with developers to help them in their journey of building their own Web3 applications. In fact, the newest data I got from our team is that we just crossed the 400 projects, built on Superfluid, which is a very good number considering we only got 200 of those in last year, basically.

[00:23:25] Michele: So this year in just two, two quarters, one and a half quarters, we got the same amount of projects that we got in a full year. So we are very excited about the growth of the ecosystem and these are not just the projects or Hackathon projects, it’s really integrations as well. So we are seeing a lot of incumbents who are Web3 established protocols out there wanting to build with Superfluid and join this kind of real-time finaance.

[00:23:50] Michele: So yeah, I mentioned Ricochet, which is this kind of dollar cost averaging strategy, but also there is one project called Diagonal. And what they’re building is effectively Stripe for Web3, they are building a kind of checkout system for websites that do streams in their background so that when you sign up for a project or a product online, you basically start paying a subscription in a stream.

[00:24:17] Michele: And then, it kind of keeps flowing. And, the good part of this system is that the merchant would have a lot of information and stats and insights about the payments and hopefully have the APIs that would be able to tell if someone is paying or not. Why I’m excited about this concept is that it’s not just only bringing or enabling subscription for web three, but also if you are a merchant, you don’t need to wait the end of the month when you’re trying to charge a debit card to know if you’re not going to get paid because the stream is either ongoing or not going. And so you’ll know in real time, if someone stops paying you and then you can decide how to react.

[00:24:58] Michele: So you can decide to stop the service altogether. You can give them a week to start the stream again. So it is very interesting and it’s very transparent. Staying in the world of payments, there is a project, but there’s a very well-known company at this point called Request Finance. They are the only player in invoicing with crypto that I know of. And they enable, you know, payments of invoices with crypto in a seamless way to avoid all the errors that we might do when we set up transaction manually.

[00:25:27] Michele: And they also have this kind of feature that allows recurring invoices that are sent automatically. And, you know, they are trying to integrate Superfluid in a way that you can have the recurring invoices go out normally and request transaction on the other side. Or you can set that a recurring invoice to request the stream instead.

[00:25:47] Michele: And so that it would just come to, you know, whoever the client is and the client would click a button and start the stream, and that would just start paying the invoice. And that would also continue indefinitely depending on how it’s set up. And then for every month, that would be a new invoice automatically set for the amount that has been paid.

[00:26:08] Michele: So that is very interesting because now you’re not only fully automating the stream. So the payment side of things, but you’re also automating the admin because now you do have the invoice coming to you on a monthly basis to be compliant to the world we are living in today. So, you know, that is very interesting and eventually it will be also an accounting tool that will be built on top of that as well, so that you have the whole, the whole cycle. And then, you know, you can basically interact with the likes of Xero or QuickBooks as well. All the other softwares that are using the accounting world to then have fully automated compliance and you would have the whole admin in the background completely automated.

[00:26:49] Michele: So those are projects that we are excited about.

[00:26:52] Umar: Can I ask for some of the merchants today, so through Diagonal finance, who are some of the merchants today accepting payment streams, like I would love to pay my subscription to those companies instead.

[00:27:05] Michele: Yeah. So, I mean, they just launched. They recently raised funding round and they just are accepting all customers that are basically co-building, co-designing some of the backend of their system with them. So they are very early days, but you know, they got interest from some of the top 20 protocols out there or providers in the industry that are basically those that are catering to crypto companies or DAOs, they are very interested in the system.

[00:27:32] Michele: Because you know, they have felt the pain of having to do everything manually because there is no infrastructure or automation software that kind of handles the whole payment cycle with cryptocurrencies at the moment. So, you know, it is very interesting to see developing, but you know, it would be nice actually for you to talk directly to them eventually because they are also looking at the accounting angle trying to understand how that would work to make sure that is fully compliant with all the regulations we have at the moment and compliance so that, you know, there is no question marks there. The good thing is that, you know, everything is on the blockchain. So it’s fully auditable at any time.

[00:28:11] Umar: 100%, I’ll do that. I’m happy to do that.

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[00:30:07] Umar: I would be remiss if I didn’t touch on accounting for payments streams today. Accounting is a conservative industry and does not move at the same pace as innovation of course, especially when it comes to Web3. We’re still struggling to come up with a standalone accounting standards for crypto, but now accountants listening should be thinking what in the world, like accounting for payments in real time, every second, like I think it’s going to be a nightmare for accountants, but what are your thoughts on the topic of accounting for payments streams? Is this something being discussed with companies who are using the Superfluid protocol?

[00:30:43] Michele: Yeah. So, I mean, accounting has always been somewhat hard, you know, because we do have the double entry ledger system where we have to consider and reconcile all transactions in a way.

[00:30:56] Michele: This is also complicated by the fact that there are multiple sources of transactions, like, you know, can have a cash transaction, a bank transaction, a credit card transaction. You have to reconcile all of these as well. Now there is a complexity though, which is all these transactions live in private servers.

[00:31:16] Michele: They live in a private, the information is somewhat private and it needs to be tracked and shared. And all what accounting softwares do is trying to put it all together in one basket. So then you can see, you know, what the bank transactions are and reconcile those against your accounts. Now, the transition from this system to a real time finance system where everything works in a stream would be extremely complicated.

[00:31:46] Michele: And the reason is that we need to make the future talk present to make it work well. Let me try to bring you to the future in a second. Then we’ll jump back into what the transition will look like. So, if you imagine an organization like a DAO today, working mostly in a stream where the revenues are coming in the real time, and the expenses are going out in real time, you can see it operating in a seamless fashion.

[00:32:20] Michele: And if there are no transactions, so assuming there is never a one-off transaction in this organization. That would almost be no need for accounting. The only need you would have is attributing each stream to the right account. And since these incoming and outgoing streams would net in real time, by the second, all you would really care about is your net flow.

[00:32:44] Michele: So say you have, you know, $200 per month of income and $100 per month of expenses, you would know that you are making a $100 per month. And your say runway is almost limited because if that continues to be the status quo, you will still be in the positive. Now where does the accounting of the future step in here?

[00:33:08] Michele: Well, you will need to think about when streams start and when they stop. So, you know, when someone will start the subscription, you will have an additional stream opening and when some client will stop your service, then you will have a stream closed. So that’s where accounting would step in and it will influence the chart of how much money the organization has.

[00:33:33] Michele: And again, you would focus only on the changes, not on the status quo very much like today’s accounting focuses on transactions and not the balance of today. Because if you pile up all transactions, you find out the balance eventually. So that accounting is quite easy because you can easily, every time you add a new stream, you’re just adding a specific amount per second or per month, just to make easier for you to visualize mentally.

[00:34:00] Michele: So you would either have like an NetFlow, which is positive, which makes means that you’re generating a profit. Or a netflow, which is negative, which means you have a certain amount of runway and then you end up needing a loan to survive as a business. So it just changes the dynamic of instead of having one off transactions coming in and out, you would have just like these transactions to open or closed streams where you just change the amount that is coming in or going out.

[00:34:26] Michele: So that is pretty easy and it can be modeled quite easily with just an Excel file. There’s not a lot of work to do. Now if you add transactions to the mix, it’s not that hard because what transactions do on top of this movement of streams is just adding or subtracting some balance to your balance sheet effectively.

[00:34:45] Michele: And then transactions, you kind of do know how to manage them because what we have done it for several years now. So you can use the old good double entry ledger, and just look at what transactions refer to which accounts. And then the accounts will have the balance bumped up or down off the amount of the transaction. So the only new element really for accounting is this idea that there is something ongoing rather than fixed.

[00:35:10] Michele: And this ongoing is just very well-defined. So the only thing that you can’t do with streams is you can’t effectively say what your balance is in a way that is actually true for a long time. I can tell you my balance is $544, because when I told you that is already $44 and some cents maybe, or, you know, some cents lower.

[00:35:32] Michele: So that’s the only thing you can’t do easily with a stream. So if you want to really see at all times, what your balances is, you need to see the data on the system. You can just see it. However, if you ask me to give me a snapshot, you know, tell me what my balance is right now. That is very easy. I can just read the data and that can be printed on a piece of paper.

[00:35:53] Michele: And, you know, on the date that we are recording this podcast, you will see exactly what your balance is. That is very easy. So the only complexity is really is in that kind of dynamic flow, which we really know how to handle easily. And to come back to the transition, the transition is just hard because we want to make sure that this new world speaks to the old world and is mostly a challenge around software.

[00:36:17] Michele: So, you know, no one in any company will be able to tell you most likely what the account status is as of now. And the reason is most companies that do that every week, or they do that every day. But there is some delay between when transactions are made and when they are reconciled on their accounting software.

[00:36:38] Michele: And so that issue is almost solved entirely with blockchain because blockchain has this kind of immediate reconciliation that can also be happening in real time because they are a public database and not a private database. So, you know, I don’t see a lot of challenges, if not the one of reconciling the streams with the existing accounting software out there.

[00:37:01] Michele: And then we have seen companies that have already tackled this problem. And they already have a solution for that, which is for example, abstracting a stream in daily transactions or in a month, a monthly transaction. So you just consider that the value you’re getting from midnights of today to the, this morning to midnight of today, it will be just averaged out at one specific value and shown in your software as one transaction.

[00:37:32] Michele: Now is not entirely accurate. What is most likely accurate enough because this is exactly what shops do when they open and close their cash registry. So they just count how much cash has come in for that day. And I think that is compliant enough option to make sure that we stick to the rules.

[00:37:49] Michele: So, you know, it can be tuned down to the hour or tuned down to the minute if you will, but then it would create too many entries in the software to be easily manageable. Whether if you have a daily transaction or a monthly transaction. It’s a lot more manageable. So I think the daily one is the most compliant we can get to.

[00:38:06] Umar: I can’t wait for the day that someone will build an accounting software on top of Superfluid. I think that would be very interesting. When you say we have to try and speak to the old world, maybe eventually the old world will come to the new world of DAOs. I think the companies that will really leverage on like this real time accounting will be DAOs.

[00:38:28] Umar: And when people will see like how real time accounting is like such a game changer, everyone will want to incorporate a DAO or something. Like the irony for me is like we taking the onchain transactions and bringing them back to this Web2world, because I mean, for this right now, we’re still very early, but those centralized accounting software there right now, the Xero, the Quickbooks, the SAPs.

[00:38:56] Umar: But yeah, eventually we will need a fully decentralized accounting software. So we keep all those transactions onchain, but that’s, we’re still very early.

[00:39:07] Michele: I agree. Like, you know, if there will be an industry where most of the values transacted on crypto rails in the blockchain in open blockchain like Ethereum, I do believe there will be companies that are either nascent companies like new ventures or established ones that will enter the scene very much like Stripe just announced crypto payments.

[00:39:30] Michele: I don’t struggle to see a future where, you know, the Xero and the QuickBooks and the SAP, will decide to also cover crypto transactions very easily. You know, since before I was mentioning the fact that we have Request Finance that is trying to integrate Superfluid for ongoing invoicing, there is another company called Cryptio, which is already integrated with Request Finance, which would very much be willing to integrate streaming as well.

[00:39:56] Michele: And we are in discussions with them to understand if it makes sense for them to cover streams as well as they get foot in the industry as well. And the people really start using them. So we do see that as well, but you know I try to understand what the possible obstacles could be for the protocol to be successful.

[00:40:13] Michele: And accounting was one of them. So we are keeping a close eye to it.

[00:40:18] Umar: Great. The listeners will be familiar with crypto. We had Antoine Scalia on the show before, we had Christophe from Request as well from. People will be familiar with these protocols or Cryptio is not a protocol, but a tool.

[00:40:32] Umar: I’m looking at the time We don’t have a lot of time left. And I want to maybe ask you for last question and then we can wrap up the episode for today. I want to ask you in terms of the challenges today for adoption for Superfluid, what are some of the biggest challenges that you’re facing?

[00:40:50] Michele: Yeah, so, I mean the first one clearly is that most of the activity in crypto stays in kind of the financial speculation or NFT game, or, you know, a little bit like the casino at the beginning of the internet. So there’s not much business happening on chain where there’s actual value transfer for services and vice versa. But is growing at a very fast rate.

[00:41:16] Michele: So that is the major challenge. You know, if crypto stays in an industry for financial speculation or, you know, DeFi & NFTs, then that’s a major challenge. And it means that business will most likely stay away from it. But all the signals we’re getting are in the opposite direction at the moment. Another challenge is that is a mind shift.

[00:41:35] Michele: People are not used to this idea that, you know, you could transfer value in real time and everyone is kind of closer or has this idea of transaction in mind, even though most of the internet natives, they believe that they understand this concept of ongoing payment a lot better because all they have are subscriptions to their favorite online service.

[00:41:55] Michele: So that’s another major one is education or mindshift. Another is unfortunately at the moment, it is still needed to wrap tokens to make it work. And there is no easy technological work around to that. And so you can’t use the kind of underlying asset directly. And so that is just, you know, one extra action that users need to make, you know, in order to access this ecosystem, which is very low friction, but it’s still present.

[00:42:22] Michele: So we are trying to look at ways to avoid that. For example with on-ramps directly to the wrapped version of the tokens or with protocols like DeFi protocols, for example, accepting this type of tokens that have the enhanced capability of being streamed in real time. So, you know, those are the major ones, but, you know, in terms of the adoption, we really care about at the moment, which is developers building with a protocol.

[00:42:47] Michele: We have managed to lower the barrier, such that, you know, we got to this 400 projects, built on Superfluid so far, & it’s just over a year that the protocol was launched, a year and two months. So we are very excited about the scene and how the developers are leveraging ecosystem. They are building completely new use cases, like for example, when you know your salary. You know, you can take a loan on it so people can start selling and they’re part of their salaries as an NFT and then get an advanced payment on future cash flows. So all these use cases are arising and you know, it’s just the new world is a blue ocean to, to navigate for these developers and builders out there.

[00:43:28] Umar: I would really encourage everyone to listening, to give you a shot at, just try and use it Superfluid. That friction, you mentioned, it’s a very low friction to wrap it and wrap the tokens. It’s very easy to do. The UI is great. I don’t think Rabbithole still has it, but I had used it on Rabbithole, but you don’t have to. Just go on Superfluid and you can easily use it and transfer yourself some like a stream.

[00:43:53] Umar: As closing thoughts today, Michele, what are some of your closing thoughts on this upcoming year of 2022? What are you looking for for this year in terms of adoption?

[00:44:04] Michele: Well, first of all, thanks for having me. It was a pleasure to talk to you and all the audience. I would say for 2022, we are really looking forward to seeing some of these major projects that are either a venture or an integration to go live.

[00:44:18] Michele: Because we have a lot of users that really do want to have a fullest service payroll automation with streams or subscriptions automation with streams. And we are just the underlying protocol. We will always be neutral and we don’t have a service per se built on top of it. So, you know, we are only as successful as the ecosystem applications built on top of the protocol.

[00:44:40] Michele: And this year is the year that many of them will go live for the first time. So last year was about getting our technology in shape. And this year is about ecosystem adoption and go live. So we’re very much excited to see the finance application go live, Diagonal to go live and Ricochet to go live as well, which is was live in v2 already.

[00:45:01] Michele: So these are what we’re looking for.

[00:45:04] Umar: Wow, thank you so much. There’s the last question that I usually ask to my guests before they leave is. Do you have a quote or a maxim that you live by?

[00:45:12] Michele: I don’t know, this is more like a personal one I would say, is not really as Superfluid, but, you know, once I was in Petra in Jordan and I was exploring a church and there was a graffiti on a wall, which said die young as late as possible.

[00:45:27] Michele: And I kind of stick to that in the sense that I’m keeping myself as young as I can through the years. and I think kind of this industry is very good for that because of the mental elasticity you need to have, and also the personality that we meet when we work.

[00:45:41] Michele, you’ve been an exceptional guests. I want to say this. You were very approachable, very friendly, very down to earth, easy to talk to, and really thank you for your generosity today. Really appreciate it. And I think the listeners who are listening for the first time today, if so are finding out about the idea of streaming payments, I think you’ve blown their mind about what’s possible or not. And I think we’ll hear a lot about Superfluid in the future.

[00:46:10] Michele: Yeah, thank you very much. And if anyone in the audience wants to build anything on Superfluid, come and see us at docs.superfluid.finance, where you’re going to find all the documentation. Join our discord at discord.superfluid.finance.

[00:46:24] Michele: And if you want to look at some ideas of what you can build, there is a dedicated webpage at hack.superfluid.finance that will give you all the information on the new projects being built, the hackathons we are sponsoring and how you can participate.

[00:46:39] Umar: Perfect. I was about to ask you this and I will include all of these links in the show notes of the episode.

[00:46:46] Michele: Thanks for having me.

[00:46:47] Umar: Thanks a lot Michele.

[00:46:48] Umar: I would like to thank everyone for listening to this episode, you will find all the links of the episode, show notes and transcript on the website of The Accountant Quits at theaccountantquits.com. Please note that this content is for general information purposes only, and is not a substitute for consultation with professional advisors.

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[00:47:34] Umar: Bye for now.