Hi Fintech Architects,
In this episode, Lex speaks with Jess Houlgrave, CEO of WalletConnect. In this episode Jess explains how WalletConnect bridges wallets and decentralized applications (dApps), simplifying secure blockchain interactions for millions of users.
Together, Lex and Jess discuss the platform’s origins, technical innovations, and massive scale - supporting over 700 wallets and 70,000 projects. The conversation covers challenges in integrating traditional finance with Web3, regulatory compliance, and WalletConnect’s decentralized, token-incentivized network. Jess also shares insights on the future of on-chain commerce, global adoption trends, and the evolving relationship between fintech and blockchain infrastructure.
For those that want to subscribe to the podcast in your app of choice, you can now find us at Apple, Spotify, or on RSS. Or to support this writing and access our full archive of IPO primers, financial analyses, and guides to building in the Fintech & DeFi industries, see subscription options here. Our current price point is only $2/week.
Thanks for your time and attention,
Matt Low 🙌
In Partnership: Cross River
Finance is rebuilding itself around programmable money and real-time value exchange. The shift isn’t just about new assets — it’s about infrastructure that speaks both banking and blockchain.
Cross River connects the U.S. financial system to the digital asset economy through unified fiat and crypto rails that move value seamlessly and compliantly, 24/7/365. With its proprietary API-driven bank core, platforms can access always-on settlement, direct liquidity to stablecoin issuers for fiat-crypto conversions, and card options for everyday spending.
The digital assets economy is here. Are you ready to build what’s next?
Cross River Bank, Member FDIC.
Key discussion points:
WalletConnect Becomes Web3’s Financial Backbone
Once a simple UX fix, WalletConnect now connects 700+ wallets and 70,000+ apps, moving $400B annually. It’s evolving into the universal connectivity layer for on-chain finance - a “Visa for Web3.”
Fintechs Are Forcing Crypto to Grow Up
As players like Stripe and Shopify enter Web3, they demand frictionless UX and regulatory-grade compliance, not crypto-native clunkiness. This wave will make crypto invisible but usable through embedded fintech experiences.
Stablecoins Will Power On-Chain Commerce and Dollarization
Jess predicts commerce, not trading, will drive the next cycle. As stablecoins become spendable everywhere, users won’t need to off-ramp - accelerating global dollarization via open financial rails.
Background
Jess Houlgrave built her path to WalletConnect CEO through strategic career transitions across finance, art, and blockchain. After three years in investment banking at Credit Suisse handling IPOs and M&A, and three years in private equity at OPTrust, she pivoted to study blockchain applications in art at Sotheby’s Institute in 2016.
She co-founded Codex Protocol in 2017, creating a blockchain-based title registry for art and collectibles that partnered with over 5,000 auction houses. As Checkout.com’s first Crypto Strategy Lead from 2020-2023, she helped the company process $1 billion in stablecoin settlements while simultaneously serving on the Bank of England’s CBDC Engagement Forum and co-founding shEOS to fund technical education for girls.
This combination of traditional finance expertise, practical blockchain implementation, and payments infrastructure experience - recognized by Forbes’ 30 Under 30—positioned her to lead WalletConnect, which connects over 500 wallets and 6,000 apps in the Web3 ecosystem.
👑Related coverage👑
Topics:
WalletConnect, ReOWN, Circle, Stripe, Checkout.com, MetaMask, Solana, blockchain, decentralized finance, DeFi, crypto, wallet, Web3, web2, UX, wallet infrastructure, stablecoins, tokens, token economy
Timestamps
1’03: WalletConnect’s Financial Connectivity Layer: CEO Jess Houlgrave on Helping Build The New Internet
4’42: Universal Wallet Interoperability: How a Single Integration Connects Every App to Every Wallet
9’06: Building Trust in Web3: How Seamless Wallet Connections Create the ‘Visa Moment’ for Crypto
11’51: Scaling Web3 Connectivity: Inside the 50 Million Users and $400 Billion Powered by Wallet Infrastructure
14’02: The Next Wave of Adoption: How Better UX and Fintech Integration Are Bringing Millions On-Chain
16’53: Beyond Ethereum: How Multi-Chain Support and Compliance Are Driving the Next Phase of Web3 Growth
19’41: When Web2 Meets Web3: How Fintechs Are Redefining Crypto UX and Compliance Standards
22’34: Bridging the Knowledge Gap: Helping Fintechs Understand the Complexities of Web3 Integration
26’37: The New Chain Race: Why Fintechs Are Repeating Banks’ Playbook and Competing for Value Capture in Web3
30’05: Decentralizing the Network: How Wallet Infrastructure Is Building a Sustainable Token Economy
35’44: The Future of On-Chain Commerce: How Stablecoins and UX Advances Will Drive Real-World Payments
39’46: The Rise of Digital Dollarization: How Open Financial Systems Are Reshaping Global Currencies
40’57: The channels used to connect with Jess & learn more about WalletConnect
Illustrated Transcript
Lex Sokolin:
Hi everybody, and welcome to today’s conversation. I’m absolutely thrilled to have you with us today. Jess Houlgrave, who is the CEO of WalletConnect. WalletConnect is the financial connectivity layer for the new internet, and we’ll unpack what that means. Jess has been an entrepreneur across blockchain, payments commerce in a variety of roles that are all super interesting, so I’m really excited for this conversation. Welcome, Jess.
Jess Houlgrave:
Thank you so much for having me. It’s really great to be here.
Lex Sokolin:
My pleasure. Let’s just jump into explaining what WalletConnect and ReOWN are. You’re the CEO of this company. It’s having fantastic traction. Can you tell us a little bit more about how you position it and what the products are?
Jess Houlgrave:
Yeah. So if we go back to 2018, I wasn’t around then. But WalletConnect was started by our founder Pedro Gomez, and it solved at the time, one of the first kind of big user experience challenges in crypto, where we had mobile wallets and desktop applications. And the problem statement was like, how do I connect these two? So I, as an end user, can interact using my wallet with this desktop application. And Pedro invented relay mechanism. And what people may be familiar with which is the WalletConnect QR code that allows a wallet to sign in to an application, and that has now grown into a network of over 700 different wallets. People from the custodian space BitGo, HEXtrust institutional wallets like FireBlocks, hardware wallets like Ledger and Trezor, and mobile wallets like MetaMask, Trust Wallet, OKEx and many, many more. And on the other side of the network, about 70,000 different projects, and we enable encrypted and seamless communication between these two sides of the network. Today, we enable about, this year, we think about $400 billion of value to be moved onchain between those various parties.
ReOWN is a subset of what we do. ReOWN is the group within the wider project that builds a specific SDK called app Kit. The ReOWN App Kit is for app developers to give them a very seamless integration experience, both when using the WalletConnect network for connectivity between apps and wallets, but also for a whole bunch of other tooling and products like on and off ramps, mobile and social wallets, travel rule compliance messaging, pay with exchange and and other things. So overall, as a group, we have this network which most people are familiar with. And then these developer tools that we build around that to make it easy for people to use and transact onchain.
Lex Sokolin:
Fantastic. Also a bit complicated. So I’m going to ask you like a foundational question, which I’m sure many of our listeners know, but it always helps. What is a wallet?
Jess Houlgrave:
We think of a wallet as the software that allows an end user to control their public private key pair, that might be software like Trust Wallet or MetaMask Wallet could include hardware and software combination like a Ledger, for example, the address, which is the onchain address that people use, which is part of like the ledger entry can be moved between wallets so we can export our seed phrase from one wallet and take it, take it into another in order to manage that public private key pair. But we really think of wallets as the software or the application that is used in order to manage that.
Lex Sokolin:
So if I’m a wallet and I’m interacting with some onchain application, some smart contract, what are the hooks that I need to do that? And how does WalletConnect integrate into that flow? Right. Because I imagine there are some people who are like, okay, I’m going to integrate directly into MetaMask. And then they realize, well, I’m not integrated into Fantom and so on. Like, can you open up a little bit how that machinery works.
Jess Houlgrave:
And kind of think of us like this two sided network and on the wallet side of the ecosystem, all of the wallets integrate an SDK that we have called the WalletConnect SDK, and this allows them to send and receive messages with an application. On the other side of the network, the app will have integrated some version of a product that we call the app Kit core, and that might be through an SDK that we build, like the ReOWN App Kit, or it might be through a third party SDK. So people like Coinbase Commerce, Dynamic, Privy - who was acquired by Stripe this year. Third web, rainbow kit, Connect Kit. There’s a whole bunch of ways, actually, that apps can integrate. And when you have an app that has an integration with the core package, and you have a wallet that has an integration with the wallet SDK and it allows them to exchange messages. So a good example might be that I, as an end user, take my wallet and I scan the QR code in order to connect my wallet to a DeFi protocol. That as a process is a message that is being passed from the app to the wallet to say, please allow a connection. And then I, in the UI of the wallet, get a request saying, you know, confirm that you want your wallet to connect into this DeFi application.
Once that connection is established, it’s like a handshake that creates a session. The kind of state of that session is what’s stored in the WalletConnect network. And then from that moment on, other types of messages can be passed. So the app could request for the wallet to actually sign a transaction, to authorize an onchain transaction or to do something like sign in with Ethereum or sign in with X, as we call it, which is a kind of chain agnostic version of that, in order to kind of sign a some sort of verification message. So basically we have these types of messages. They’re all standardized. We work with something called CAIP - chain agnostic improvement proposals, which kind of mimic EIPs and ERCs, but are fully chain agnostic because we work at the WalletConnect level across all different chains, and these types of sort of standardized messages allow the app and the wallet to communicate with one another.
Lex Sokolin:
So we are far away from the world where, you know, some application thinks about integrating with just one wallet directly. Is that how it all started back in 2017, 2018?
Jess Houlgrave:
100%. So I remember when I was building, I used to build a kind of first startup in this space with something called the Codex Protocol. We were really, really early in this idea of using NFTs, although they weren’t really called NFTs at the time, to track the provenance of assets. And we were building this application, and all we could do was have the MetaMask browser extension as the way to connect. And for every other wallet, we were either going to have to make one by one integrations, which was obviously technically complex, or we were going to say, hey, we just open up to MetaMask users, and if you don’t have a MetaMask wallet, you can’t use this app. So a world without WalletConnect now is one where as an app developer, you would have to integrate some three or 4 or 500 different wallets in order to be able to open up to that broad user base. And there obviously we you know, we wrote some other standards like the EIP 663, which allows an app to recognize automatically recognize browser extension wallets.
And so there are a few other innovations around there. The best way to think about it is that like single integration to access all wallets.
Lex Sokolin:
Interesting. It reminds me a little bit of the early days of like, using credit cards on the internet when there were no standardized processors to take in credit card information. And so, you know, you were just sending your data and your number and all that stuff into some text forms stored on some server. And it took a while until you had the standards for interoperability and encryption and all this stuff come out. And now, if I’m coming to some on chain application that doesn’t prompt me with a WalletConnect choice, I start feeling like this isn’t a very safe place to be. Like we’re now much more mature in the infrastructure that can actually get a user into one of these DeFi apps.
Jess Houlgrave:
Yeah, and I think this, this whole thing of like helping users to feel secure is really at the heart of a lot of what we do. And over the last, like year, we’ve seen this huge growth in the number of payments companies wanting to accept crypto as a payment method.
And every now and then I see their first implementations, and it’s kind of like going back in time in crypto world because there’s, you know, type your wallet address in here, but box or copy and paste your wallet address. And as a crypto user this gives me like this tingly anxiety where I’m like, oh God, I’m going to fat finger an address, and the funds are going to go to the wrong place. And I don’t know where this you know, where this is being sent. The whole point of WalletConnect in many ways is that you have this ability to seamlessly connect your wallet. It’s as simple as scanning a QR code and clicking confirm. You don’t have to worry that you’re typing in an address wrong, or copying and pasting. And there’s, you know, you lose a digit or something. And over the last couple of years, we’ve really invested in other security things that we can layer on top of that to give end users an even more kind of comfortable experience.
So we have this thing called the verify API, where an application verifies the domain that they’re using on the network. So in the wallet itself, if it looks like you’re interacting with a domain that isn’t what it says it is, you’re going to get a warning and say, this is, you know, this has been flagged as a malicious domain or this is an unverified domain. Please take care. And we’re about to extend that actually to some other features around smart contracts and stuff later this year. And so as you say, it’s giving people this kind of familiarity. You mentioned when you when you did your very kind introduction for me. I spent some time in the payment space, and even just as an end user of payments experiences, I kind of know when I see a Visa or Mastercard sign wherever I am in the world, it gives me this feeling of like, okay, I trust this. I’m happy to give over my credit card because like they accept visa and they’re part of this, this network that gives me confidence and imbues trust.
And I think in crypto WalletConnectors has in some ways. And I hope over the coming years we will do even more to prove that, you know, becoming that symbol of trust for end users, that gives them confidence that they can connect their wallet safely and securely and they can transact.
Lex Sokolin:
It’s funny you describe the fear of fat fingering and address. I don’t know the last time you’ve had to use the traditional banking system and send a wire, you know, and you have to like, literally type in the number of the, the international routing numbers and so on. And then you’re not allowed to copy paste things in. Yeah. And it’s just I mean.
Jess Houlgrave:
Horrible.
Lex Sokolin:
People feel like the crypto user experience is bad. But $100 to put things into a form, you know, is definitely much worse. Yeah. I want to ask you a question on sort of the scale. And I mean, the numbers that I’ve seen are 50 million unique actives. Can you talk about how you define who are those 50 million people? Where are they? And is that just like a monthly active doing stuff? What’s the whole install base of the crypto universe based on where you sit?
Jess Houlgrave:
One of the most interesting things about the place that we sit in the ecosystem is some of the data that that we have access to, which we take obviously very, very seriously. And when it comes to the transactions itself, they’re all encrypted. But we look at who’s transacting, how they’re transacting, how much volume is being processed. So the 50 million active wallets basically comes from something that we call a client ID, which identifies a specific wallet address pair. And we’ve been looking at that since the V2 of WalletConnect back in 2023. Just before I joined the company, there was a huge protocol upgrade, which was very, very complex for the whole industry because everyone needed to make a lot of change as a result. And we did that to kind of set the scene for decentralizing the network, which we finally added these third party node operators last year. Anyway. So I slightly digress. Basically, that 50 million is the number of unique end users who have transacted using WalletConnect since v2.
So since the middle of 2023, we have a lot of those are repeat users. To give you some other idea of scale. And as I mentioned earlier this year, we think we’ll do about $400 billion of onchain transaction movement as a result of WalletConnect. And about 70,000 different applications have registered project ID and about 700 different types of wallets.
Lex Sokolin:
What do you think is the total crypto user installed base across the world? What would you guess?
Jess Houlgrave:
I actually have no idea. Do you have a number for that?
Lex Sokolin:
That’s fair. If I count the addresses across the large chains. I mean, you’re getting into, I think over half a billion addresses, maybe towards a billion. Now, it’s been a while since I’ve looked at the numbers. You know, I think a material portion of that is bots or people farming or doing kind of civil actions. So I don’t know how it maps to a human individual. Yeah, I know on MetaMask, I think the numbers that they’re putting out these days is somewhere around.
The largest number I’ve seen is between 50 and 100 million, and my guess is that’s total install base. So I, you know, I don’t know, actives, but we’re definitely getting there in terms of I mean, it’s beyond mindshare. Right. Given the situation in the US. But in terms of just regular people having access.
Jess Houlgrave:
Very much so. And I think that, you know, a lot of that has come from just this much better user experience. It really pleases me, actually, when I see apps and wallets who kind of hide the crypto under the hood and just give people a great experience and that like onboarding for new users, I think has now become so simple and easy that we’re going to see so many more people come on chain in various degrees. It doesn’t mean they’re going straight for like full on self custody and hardware wallets and hiding their seed phrase under the bed. But people are getting more and more exposure, whether that’s just through a fintech app that allows them to hold crypto and, you know, people sending money more and more easily.
Obviously, stablecoins and the Genius Act have opened up a lot of stuff for that. So I think we’re going to start to see it everywhere. And we see that in the partners that we’ve started to work with over the last year and a half. That’s really changed a lot, actually, from being predominantly three applications. And now some of our biggest growth segments are web2. They are payments. They’re kind of you know, we work with merchants like Stripe and Coinbase and Shopify, and these are some of the biggest segments of growth that we’re seeing. And we also have more and more wallets, including like fintech type wallets that are designed for the everyday user who are connecting into the network so that their users are then going to be able to use funds across Web3 more easily. So I’m very optimistic about the next few years in terms of wider adoption.
Lex Sokolin:
I actually would love to double click on the way that the Web2 companies and the fintechs are thinking about the space. But before going there, I have a question about the different chains that you see usage in. So I think your adoption kind of leans towards the EVM world. Can you talk about sort of usage by ecosystem and then sort of any reflections in terms of the difference in the ecosystems and what they like?
Jess Houlgrave:
Yeah. So you’re right. WalletConnect when we started was kind of very EVM oriented. Although our architecture is really very chain agnostic. So as long as there are a couple of standards CAIP standards that the chain can support, then we can work across any chain. The actual implementation on the side of the wallet and the app can be more or less complex depending on the chain. But theoretically we work with everyone. And I think it’s been very interesting. The last couple of years, we kind of launched more like full feature premium support for Solana, They’re probably at the beginning of, of this year. And we’ve seen big growth there. I think I love the Solana community. I think that there, you know, there’s always a lot of very interesting experimentation going on there, real users who want to actually test products and use them, which is nice.
Every now and then I talk to somebody in the Ethereum space who might have been working in it for ten years, but has never actually used an application. So I have a particular soft spot for Solana in that regard. Bitcoin is another really interesting one where we launch kind of like full support for that at the end of 2024. We did that because there was a big push around the Mica regulation in terms of travel rule compliance. So funny that compliance is a big driver for product development. But this basically rule that came in at the beginning of the year said if you’re moving funds from a regulated environment, like an exchange into a self custodial wallet, you need to be able to prove who the ownership of that wallet is. And so WalletConnect can allow you to do that, and it’s been great fun over this year to see just the activity in terms of the number of applications being built on Bitcoin and other UTXO chains, we have a partnership with Stax and and others. And for me, that’s very interesting because obviously Bitcoin was the first chain that I had exposure to a very long time ago now, but for a very long time was just, you know, really a store of value. And so it’s been interesting to see the growth of developer activity on Bitcoin.
Lex Sokolin:
Interesting. Going back to that fintech question, what’s the difference in terms of what companies like Stripe and Shopify, what do they want from platforms and protocols and Web3 that might be different from what Web3 has been building all along? The broader context is, of course, stablecoins are coming. I think they’re replacing the failure of embedded finance. It’s a better open standard for money, bank deposits and so on. But the companies that are moving that stuff around, you know, they’re modern and they have different expectations. So I’m curious if there’s any sort of surprises or differences in mindset or view that you’ve seen from those types of customers.
Jess Houlgrave:
You know, one thing that that comes immediately to mind is just the standards and how much thought these companies put into user experience. Sometimes I think in crypto, particularly if we’ve been building in this space for some time, we can kind of become a bit complacent. You know, it’s that philosophy of like, are we kind of everyone’s had to put up with seed phrases and you know, this like connect and then sign.
And so like, we just do it. We just kind of keep going because that’s how it’s always been in crypto is a little bit painful. And then when you when I start speaking with a, a web2 company like that’s not okay. They view their competition as web2, not other Web3 companies. And if you want to get somebody to start actually paying with crypto, the experience has to be as good or better than tapping your card. And today it’s you know, we’re still a little bit away from that. So one thing is just this like very, very like big focus on delivering an excellent user experience. And we’ve been innovating on things like a standard called one click auth, which allows you to combine an auth and a sign message in one and and other innovations, especially in the payment space, that allow you to do this kind of express checkout process. Because these companies also have invested hundreds of millions of dollars collectively over the last few years understanding what good user experience looks like and whether that’s in Web2 or Web3.
We don’t need to kind of recreate the wheel. We know that people want a particular amount of friction and some friction can be good in a payments process especially. But, you know, there’s a ton of research around that. And so often these big companies have much more established understanding of user experience and a big focus on that. I mean, the other thing that obviously is very important, especially if you’re talking about payments, is, is regulation, whether that’s around transaction screening, anti-money laundering, viewing sanctioned addresses or things like I touched on earlier, the travel rule and other compliance pieces. As soon as you’re starting to interact with a regulated payments company, these things are really top of mind for them. They are their regulated institutions. They’ve got to be very cognizant of that.
Lex Sokolin:
Are there things that they don’t understand or trip up over repeatedly? You know, and I don’t mean like kind of throwing anybody under the bus, but more of just because from Web3, a lot of the way people approach the world is with idealism, right? Like, there are no rules.
You just build everything from first principles. But when you’re a large company with a big footprint, whether you’re a Stripe or a Checkout or a Shopify, you have a very certain way of looking at the world. Are there any kind of areas of friction you think that it would help to highlight, so that people who are trying to bring more fintechs into the fold, like work on that, or try to polish that up?
Jess Houlgrave:
This is ultimately, for many of those institutions, a very big learning curve. Even when you’ve been working in this space for a long time. Understanding things like what is a wallet versus an address? You know how the different addresses appear on different chains. How should I think about different assets on different chains? These are all really, really complicated things that maybe because I work in them everyday, I can sometimes, you know, become a little bit complacent about. But actually when you put on the lens of a web2 company starting to build in this space, they have a ton of questions about how all this stuff works.
And what we’ve really focused on over the last year is we’ve been bringing a lot more team members into the team who have web2 and fintech experience because often they are really great at translating kind of some of these problems and these technical things into a language that these web2 banks and fintech companies can really understand. And that’s sort of part of the role that we play, is helping them to become educated about this, to understand it, to find the right partners. Some, you know, we obviously focus on a very specific piece of the stack, but we will introduce other partners who work on other parts of the stack because it is complicated. It’s not as simple as just a transaction. You know, who’s going to do your RPC stuff. How are you going to send that? How are you going to transmit information? Do you want to build a customized UI? Do you want to use an off the shelf UI? There’s a there’s a lot of questions there that aren’t so obvious.
And that’s why you see people implementing a box. And you have to type in the address. And because they’re just not aware not necessarily aware that better solutions exist out there. It’s a real privilege, actually, for us as a Web3 company, and I think for many other Web3 companies out there, to be able to play that role and help onboard these institutions into the world that we want to see exist in the future.
Lex Sokolin:
Yeah, that makes perfect sense. I have a difficult question, and I wonder what we can say about it. But as we have this influx now of fintechs, right. Because banks came in earlier than the fintechs, because they’ve been thinking about capital markets and they’ve been thinking about offering their own asset management products and blockchain as sort of replacing internal technology services and so on. So the large banks from JP Morgan to UBS and so on has been they’ve been exploring the space for a long time. And the fintechs have always been really focused on distribution, growth, their products, you know, their customer needs.
And they’re very customer centric. So they’re starting from things that people want, which often means not crypto, toe, especially if they’re targeting some particular demographic, and it takes a while for consumer desires to change. And therefore for these consumer centric companies to change, they’re now coming into the space in 2025. And to me, it feels like running the bank playbook of 2018, 2019 of wanting their own chains, you know? So we had this whole cycle of private permission chains and public permission chains and private consortia and side chains and all this stuff for different industries. And I remember this for trade consortia around supply chain financing. I remember this for capital markets and so on. And now we’re seeing this happen in payments. So you’ve got Stripe building out Tempo. You’ve got Circle building out its own. Unclear exactly what but at least a network loosely speaking you have Tether which is at least two different payments chains and so on. And so it seems like part of the go to market motion for these web2 fintechs has been to come in and vertically integrate quite quickly.
I wonder if you have any thoughts around that from the perspective of a web2 participant like why is this happening? You know, why is this necessary for commerce? What is it that they’re trying to accomplish? And then what are the likely outcomes from trying to spin up these efforts?
Jess Houlgrave:
It’s a very interesting point, and I think it’s even even in our company, we often have these discussions because at WalletConnect, where we are distributing the network, we have this we have multiple node on node operators. We have now the WalletConnect token. And I think the whole point comes down to like where does value accrue in this over the long run. And in the same way that people want their own stablecoin because they want to be able to, you know, have the income and the revenue associated with that? I think people typically have two reasons to want to build their own chain. One is that from a product perspective. They want something different than what is on the market already. They want different privacy features especially.
That’s important, I think, in the payment space or in number two. They think that like value is going to accrue to the chain level, and that by owning and building the chain, they’re going to be able to capture more value. And there is, I think, this dichotomy of when you innovate in a public good and you say, maybe this product isn’t right for me right now, but I can contribute to it and make it better over the long run, and that’s going to create much wider benefit over the long run. Those processes take a really long time. Like we at WalletConnect spend a lot of time writing the EIPs and contributing to Ethereum improvement proposals and other things. They just take a really long time. And that’s because you have to get all of the community on board to make specific upgrades. Whereas if you just say, okay, I’m going to build my own thing. You can do it however quickly you want, and you just make all the decisions and doesn’t necessarily, in my mind, mean that that’s going to be where value accrues over the long run, because it’s going to operate in isolation.
And so I think we, you know, we’re at this very interesting point in time where I think a lot of people are trying to innovate, they’re trying to capture value. But I think we have to slightly shift the mindset, which is that we’re trying to build something here that is different from the systems that exist today. Some of the systems that exist today don’t serve people very well, and we have an opportunity to rebuild something in a way where there’s less rent extraction by big institutions and where we can create better systems for the people on the ground. And I think that that’s a fight that’s going to play out over the coming years, is whether these institutions can continue to capture rent in an economic sense and by the way, like, perfectly legitimate that they’re trying to do that they have a fiduciary duty to their shareholders to create value and versus this idea that maybe we can innovate in a different way. And by creating these public goods, actually, we can create a better system than, than we had right now.
Lex Sokolin:
It’s amazing to watch it play out in slow motion. And like you said, the incentives are quite complicated. So that brings me to the adjacent question, which is for WalletConnect. You know, you have this very large network with $400 billion in annual volume, right? So that’s probably half of Stripe, maybe a third somewhere between there and, you know, very, very chunky. What is the economic model for the WalletConnect token for the company. Like how do you think about what it means to touch these transactions. But, you know, maybe not necessarily monetize them.
Jess Houlgrave:
I think when I, when I joined WalletConnect a couple of years ago, this was really the question was like, what do we do with this amazing network and software that we’ve that we’ve built? And one of my one of the biggest pieces of feedback that I had in my first few weeks, all I did was just try and talk to as many customers as possible and, and learn how they used us and what they wanted to see.
And one of the biggest pieces of feedback, particularly from some large wallets and some applications that use the network, was like, we want to be able to run our own node. We don’t want to be in a world where we’re dependent on you as a start up entity for our connectivity, because like if you guys go down, no wallets can talk to us. And we, you know, the app is kind of useless. There was this huge drive to say, let’s decentralize the WalletConnect network so that it becomes more resilient and censorship resistant over time. And that had always been Pedro’s kind of vision and mission was to create something that that could be done in the absence of us as a, as a single company. So last year, we, we made the first major step towards that by introducing third party node operators. We now have of 22 different node operators running the WalletConnect network. And in order to make that sustainable over the long run, obviously we need incentives for participants in the network.
And we have many different types of participants in the WalletConnect network. We have wallet apps, app SDKs, node operators and end users. So we’ve done a lot of thinking about like what are the all the different incentives for all of these different groups? And how do we create something that, over the long run, can exist and be sustainable and resilient? So the WalletConnect token today has a couple of key functions. So we have a rewards function for both wallets who are provisioning the network effectively with users and capital and for node operators. And we also have staking rewards for end users who are holding the WalletConnect token. And one thing that the community will see from us later this year is our first kind of proposal around fees for the WalletConnect, network and token. So like over the long run, once this Prius, because we have no inflation in there in the WalletConnect token economy. So we have at the moment we have a kind of pre funded rewards pool which is being used to incentivize the participants.
But over the long run that rewards pool really needs to be renewed with some form of revenue for the network. And the high level idea is that apps who are benefiting from the ability to get have payments and transactions come through the network will pay some, some fees in order to be able to do that. Those fees will go back into the rewards pool and then be used to incentivize node operators who are provisioning infrastructure and wallets, and end users who are using the network. That’s a long journey. Again, we’re trying to do something like many Web3 companies. We’re trying to do something that has never quite been done before and create something that is different. That first kind of proposal will come out at the end of the year so that we can get feedback from the community. A lot of our applications, a lot of the top apps on the network, you know, we’ve spent time with them over the last couple of months to understand their feedback and get their buy-in for how we’re thinking about this.
And so we could I think probably by the second half of next year, see fees and revenue for the network turned on, which will be the next kind of major milestone in ensuring that WalletConnect is here and is resilient for the long run. That’s not to say that we as a company are going anywhere. By the way. We have some revenue streams and other forms, predominantly by this ReOWN app kit package that that we have that we, that we sell to enterprise developers and we have plenty of runway as a, as a company. So we’re, we’re definitely not going anywhere. But ultimately we want this to be an incredibly resilient and important part of Web3 infrastructure for a very long time.
Lex Sokolin:
So the follow up question I have for you is around the nature of what Web3 is for. And, you know, one of the things that I think we’ve seen happen over the last ten years or longer is the usage of Web3 for trading, investing and speculation. And a material portion of transactions is that most of the smart contracts are some version of DeFi or some sort of sales platform, and so on.
Now, with the entry of all these new players into the space, we are opening up commerce to Web3 infrastructure in the way that I think people haven’t tried as much before. Just the industry wasn’t ready. You had prior experience at Checkout, and I think you’ve probably been thinking about commerce as a as an important pillar of what we’re all doing here for a while. You know, at Consensys, I know that we also bundle DeFi with commerce, and we’re always hopeful that there was going to be a big payments element to things. Coinbase, since almost the beginning of the company, had their trading arm but also had Coinbase payments. And now all that stuff is getting integrated into theoretically AI agents and so on. And yet if you look at the numbers, there’s still such a massive, disproportionate lean into capital markets and trading revenue versus commerce revenue, maybe 95% to 5%, something like that. Do you think that onchain commerce can happen, will happen. And you know, what are the catalysts? What are the trends currently in that direction?
Jess Houlgrave:
Yeah, I mean, I’ve been always very bullish of onchain commerce, whether that’s like consumer pay ins or consumer payouts. It’s probably my favorite use case that I’m most excited about. I think there’s a lot of friction, though, to seeing these things evolve. If you look at like the traditional payments world in the US, we’ve had the notion of faster payments for well over a decade now. Arguably, there’s absolutely no reason why people shouldn’t use faster payments versus, you know, other forms of payment in the US. And yet it’s still only at about 1% of all consumer payments. And that just kind of highlights how slow consumer behavior is to change. And so I think it’s absolutely no surprise to me that we haven’t seen the growth in crypto yet, especially when you think about how much more complex it is actually today as an end user versus using faster payments. Still, we’ve only just really, in the last year or so solved this issue of like, I need a seed phrase, I need gas in my wallet, I need a specific gas token in order to be able to affect a payment in a completely different token.
I have to know which chain things are on. All of this is kind of complex, and we’ve just really kind of started to solve some of those issues. So it’s not surprising to me that payments is as small a proportion of, of onchain activity as it is today. I think, though, I’m very optimistic about that, because now that we have started to solve that, and particularly with regulation as well, changing, you know, more and more people are moving into this space and making it easy for people to adopt. There’s also this kind of critical mass that is really helpful when it comes to this as a technology, because it’s no good for me if I have to go on and off ramp every single time I want to do something. If I get paid in stablecoins, but I can’t actually do anything with those stablecoins, I have to off ramp them into fiat. And that’s just another point of user friction. Whereas I think once we see this critical mass, which is that like I can get paid in stablecoins and then I can go to my corner shop and buy my coffee and I can pay my utility bill and my tax bill in stablecoins.
There will never actually be a reason for me to want to off ramp. Like why would I? It’s just added cost and friction. And so I think that, you know, we’re probably still five, ten, maybe even 15 years away from seeing that, you know, on a global scale. But what’s very interesting, I think, is when you look at places around the world where they don’t have very well developed financial infrastructure today, they don’t have the equivalent of a, you know, free, faster payment system. Those are places that are really leading the charge. They have the opportunity to leapfrog more developed financial infrastructure by just going straight to stablecoins. And we’re seeing this critical mass being reached much faster. And we’re seeing consumer adoption accelerate as a result.
Lex Sokolin:
Absolutely agree with you. It has an immense impact on the world. I think one really interesting unintended consequence, and you hear this point of view now coming out of China in a political sense, but I think it’s correct is that once you give to everybody this like gigantic open source financial system that can support commerce at scale and give everybody sort of free bank accounts with inflation linked treasuries and all this stuff, you start getting internet scale effects on currencies, you know.
So in the same way that you might have power laws for popular musicians or popular search engines or for popular financial companies, you know, where, like, the largest companies become larger and larger and get actually returns to scale rather than getting penalized for their scale? The same thing is likely going to happen with the US dollar. So if the infrastructure to the developed world that supports savings, commerce, investing and lending and all this stuff is denominated in the dollar, then you’re going to have a lot of pressure on other currencies. And I think we’re just starting to see the effect of that.
Jess Houlgrave:
Very much so. And I think if I was a central banker or policymaker, politician in any country that did not use the dollar, it would be something that would be keeping me up at night for sure. And, you know, even this week we’ve seen head of the Bank of England very much like changed tone, I think, in terms of how they think about this shifting away from like, we don’t want this to, okay, we just need to sensibly regulate this.
You know, I think we will start to see Euro and EURC from Circle take effect. There’s definitely demand for that stuff, at least when I speak to payments companies. You know, their merchants operate in euros. They want to receive something that’s denominated in euros because they don’t want to manage the FX risk. So I think whilst the US dollar predominance is certainly like there today, I don’t think it all is all is lost. But I would be thinking as a regulator very carefully about how I can protect my national currency against the kind of global dollarization that could be driven by this.
Lex Sokolin:
Absolutely. Jess, this has been a fantastic conversation. If our listeners want to learn more about you or about WalletConnect, where should they go?
Jess Houlgrave:
I’m @JessHoulgrave on Twitter. I’m also on LinkedIn for the for the more web2 folks probably out there. And you can follow us on any of the social media platforms at WalletConnect. And if you’re building on us, please let us know and get in touch.
Lex Sokolin:
Awesome. Thank you so much for joining us today.
Jess Houlgrave:
Lex, thank you so much for having me.
Lex Sokolin:
Thank you.
Postscript
Sponsor the Fintech Blueprint and reach over 200,000 professionals.
👉 Reach out here.Read our Disclaimer here — this newsletter does not provide investment advice
For access to all our premium content and archives, consider supporting us with a subscription.
