Former Forex Trader Pascal Ditched his Bank and Went Full Crypto
Fintechs and banking apps won't ever be able to match the user experience of decentralized finance, he says.
Hello defiers and happy Friday! Sharing with you an interview with Pascal Tallarida, CEO and cofounder of Jarvis exchange, is two months away from going one full year living without a bank and relying almost exclusively on cryptocurrency and DeFi platforms. He’s minted Dai at a bar to pay for drinks and DeFi lending interests allow him to pay for all of his groceries in Bulgaria. Pascal says the main feature that will bring in users in the developed world won’t be high interest rates; it will be DeFi’s better user experience, which he thinks traditional banking apps will never be able to match.
The interview has been edited for brevity and clarity and I’ve bolded my favorite quotes.
Pascal Tallarida: I was traveling across Europe trying to move from one country to another every year and I really liked Bulgaria so I decided to settle there five years ago. My background is in the financial industry. I'm a senior or Forex trader. I spent the past 12 or 13 years on the financial markets. I have launched two companies in France, one which is an educational company that teaches and coaches people in trading, investment. In parallel we have developed a prop trading company, where we hire traders, give them capital, manage their risks and share the profits.
Then we wanted to develop a trading platform and launched it. Back then someone came and said, look into cryptocurrencies. So we started to look at it and we started to develop a trading platform for centralized exchanges. This was in the beginning of 2017 and pretty much that's how I arrived in crypto. When then the ICO craze arrived I started to be way more interested by the underlying technology of blockchain, especially applied to finance. We gave up on the idea of making a basic trading platform and went all-in on the crypto sphere.
In the beginning of this year I was interested in everything related to decentralized finance. I started to lend my Dai using centralized applications, like Celsius network, and also decentralized applications, like Compound.
I made a video to educate my French community about it. And while I was making the video, I was like, “You know what guys, I will make a test for the next three months. I'll replace my cash with stablecoin, and my bank saving accounts with lending applications and protocols, to use them as crypto saving account, and I will give you my point of view in three months.” And during the the three month experience, I enjoyed it as helped me to put more energy and most time into DeFi. And actually I totally fell in love with this idea and I decided to continue this experience. So I decided try to hold the experiments into January so that it will make a complete 12 months.
Camila Russo: Can you tell me more about how you manage to do this? Like how do you pay for rent? How do you pay for everyday things?
PT: Yeah, so the first thing that is very helpful is that living in Bulgaria, the cost of life is pretty low. Interests that I generate every month with my capital were enough to cover at least the food expenses. For rent, I'm using Wirex, as the fiat gateway, so I receive my salary in Dai, covert it into euro, then I go to the ATM and withdraw it and I pay the rent, or eventually I can wire it, using Wirex too. And it's the same way, for all the interests, that I accrue. So when I want to pay for food or whatever, I am only using my Wirex card, which is not a perfect system. When you use the Wirex card, if you wants to pay in a currency, which is not supported, and in Bulgaria we have lev, we don't have euro, you are charged with an additional three percent fee. That’s in addition to the 1 percent fee you pay to change Dai to euro. Actually I didn't make that much money this year because of all the fees and rate price. Also when you convert Dai to euro you lose on the price. But it was more to show to my community that it's possible, maybe not for everyone, but in theory it's possible. And so I wanted to show them what the future could look like as soon as everything is more scalable and cheaper.
CR: So how were you able to receive your salary in Dai?
PT: In Bulgaria you have the right to be paid in cryptocurrency as soon as you declare it. I'm paid in Dai basically most of the time. Sometimes ether but most of the time in Dai.
CR: What does Jarvis do?
PT: We are doing two things, a contract-wallet and set of trading protocols. The protocols give to anyone the ability to trade or invest in any financial assets and markets, either through synthetic assets or through margin trading. Our first protocol give a margin economic exposure to the price of any assets, whether it's a forex pair, stocks, commodities or cryptocurrencies, by depositing a collateral in Dai. We launched it on the testnet this summer and we hope to launch on the mainnet at the end of the year; next year we will spend all our time and energy to try to decentralize it as much as possible, and to make it one of the building block of DeFi. Right now it has still a lot of centralized components.
The second thing we are doing is a gateway for DeFi ot easily onboard anyone into it, even non-crypto people, and then help them to leverage from all the DeFi services, products and protocols. We work hard hiding the underlying technology to make it look like a normal fiat wallet.We are partnering with UniversalLogin, to develop a smartcontract wallet, with ENS login, meta-transaction, multi-signature features, DeFi protocols natively integrated and a web3 provider to connect to non-integrated protocols.
CR: Which application have you tested so far?
PT: All of them. Literally. I have started in Celsius in the beginning of the year and then on Compound. And then I started staking my Dai everywhere; Nuo, dYdX and Fulcrum, and most recently DDEX. I tried to do some arbitrage, even across centralized and decentralized solutions; as example I borrow or mint Dai, sell it on Bitfinex for USD and lend USD there (which has a high rate).CR: Which one is your favorite or can you tell me a little bit on kind of the pros and cons that you've found across them?
PT: My favorite is Compound just because historically it's the one that they have used the most among all the other DeFi projects. I also like Fulcrum because it allows, like Compond, to tokenize your balance. This, for me was awesome because it opened up a lot of different possibilities, as example using cDai or iDai in our trading protocol instead of Dai. I also like Nuo a lot even though the liquidation process is a bit more risky, but the rates there were incredible last summer. I think the highest rate I had was close to 33 percent on my Dai.
CR: You mentioned something about tokenizing your balance on Fulcrum, how does it work and how did he use it?
PT: Well, the same way that you have cToken with Compound, you have iToken with Fulcrum. When depositing Dai there, you mint Dai (iUSDC for USDc, etc.) which helps you remaining liquid. Just like cTokens, it becomes a primitive that you can use in a number of other things like, you use them as collateral for loans, margin trading, or even build things on the top of it, like rDai.
CR: Oh, that's interesting.
PT: I have to mention, I still have Revolut. I was topping-up my Revolut account with my Wirex card numerous time. As I told you, every time I used my Wirex card in Bulgaria I have to pay 3% of additional fees, but two months ago, someone showed me that you can use the Wirex card to top-upyour Revolut account. And that's how I can use my Revolut card, which doesn’t charge any fees.
CR: Okay. Got it, let me see if I got the process right. You receive Dai salary from your company Jarvis, then you deposit that Dai across different decentralized and centralized solutions to get an interest rate return that kind of has varied during the year between, from 4% to as high as over 30%. From the crypto you get from your salary and the amount of money you make from interest, you convert that to euros into using Wirex. And Wirex also gives you a card, which allows you to pay for different things for your daily expenses. But the problem with that is that it charges you 3% when you're not using euros (or any other supported fiat currency). So in Bulgaria, you transfer the euros from your Wirex card to Revolut and use Revolut card to pay for your daily expenses because you don't get charged an interest rate. And then you mentioned something about withdrawing cash euro with Wirex. That was to pay your rent?
PT: Yeah. Bulgaria has a pretty low level of card acceptance so you always need to have cash with you. Also I am using Wirex, because another project I follow, Monolith, was only available for iOS users. Recently Monolith has launched their application on Android, so now I'm going through the KYC to see if it would be better to use Monolith rather than Wirex.
CR: Okay. And Monolith is also a card, right? It's like a debit card.
PT: Yeah. Monolith is a non-custodial wallet, unlike Wirex, whose is fully custodial; the good point for Wirex is that since it is a centralized application you can hold Bitcoin, ether, XRP and Dai while Monolith is a contract wallet on Ethereum, so it’s only supporting Ethereum tokens and Ether. Whenever you want to use your Monolith cards, you just convert your tokens into euro in their app and load your visa card. I'm doing the KYC right now hoping to receive the card soon. I would feel maybe more comfortable to use Monolith because it's a way more decentralized than Wirex. But again, I’ll have to see with the fees and so on what's better.
CR: So far, what are the pros and cons of living a full crypto life and not having a bank?
PT: It takes a lot of time actually to monitor the rates, to go through everything, and to make all these transfer. It's also risky because I really moved all my assets from my bank account to crypto. So if there's a crash, a problem with the Dai peg, or if I loose all my device and seed phrase, whatever, you know, it’s risky. I have kept a bit of cash money just in case something happens, but now most of my wealth is actually in crypto.It is actually useful because I have a skin in the game, so it helps to design and think better crypto product. And as I said, until recently because now the rate has really dropped, I was able to gain more interest than what I have to spend to eat. But again, Bulgaria doesn't cost that much money compared to France or others places. The biggest challenge actually is to monitor everything everyday and to move your money across different platforms.
Also, it is anecdotic, but everytime I want to use my Wire card, I have to check if there is money in there. Sometimes I forgot that my wallet is empty, so in front of the casher, I have to take my Dai from Compound, pay network fees, transfer them to Wirex, pay network fee, exchange them for Euro, pay commission fee and a spread, and then do not forget to load the card. This is quite a heavy process. But it's not that hard. I didn't make a lot of money because I paid a lot of fees everywhere. But it's cool.
CR: What’s the coolest thing you’ve done with DeFi?
PT: The coolest thing I have done? Of course, all my friend know what I'm doing. So one day we're in a bar and I wanted to show them how cool it was to mint Dai and then to pay with it. So I put some Ether into a CDP, borrowed something like 20 Dai, sent them to Wirex, converted them to euro, loaded the card and asked the waiter to come so I could pay the bill with the card. My friends were like, whoa, you created money just like that, out of thin air.
CR: Amazing. So how long does the process take?
PT: Every time I want to do the whole process, I have to block something like one hour of my time to withdraw from here, to exchange here from here, because you know, I'm not using only Compound. I'm also using Nuo, dYdX and so on, so I have to pick a bit from everywhere, and seomtimes the network is congested
CR: So what would make your life easier? If somebody could develop a product that would have made your processes what do you think is missing to go full crypto?
PT: So actually, the point of the experience was to show our community what Jarvis wants to solve. So basically the wallet that we're building with Universal Login aims to solve these issues. The idea is that to have a wallet with a very low cost fiat on and off ramp, with possibility to hold a synthetic assets. To not only to have Dai, but dollar, GDP and Swiss franc. To have native access in one click to decentralized lending protocols. So to unify everything. Basically to have a trustless bank, but with a very good fiat off and on ramp. It's a missing part.
CR: Right. Because there are many fiat on and off ramps, but maybe what's missing is a cheaper version?
PT: Yeah. Most of the fiat on and off ramps charge from one to five percent. So it's okay if you just wants to speculate on crypto, you don't care about paying 5%. But if you mainly have a stablecoin and you rely on earning interest rates using some protocol, then every percentage actually matters.
CR: Besides earning interest, did you do any like margin trading or like more speculative stuff?
PT: I don't forget where I come from, so yeah. I'm staking, a lot of SNX on Synthetix, I’m one of the believers on this project. So I'm staking SNX, I'm staking on Cosmos as well. Actually, the interests that I'm earning every month, what I don't need, I'm reinvesting into a basket of cryptocurrencies. I'm buying a BNB, Cosmos, Bitcoin, Ether, and I'm also using leverage tokens on Fulcrum and dYdX to take some position on Ether.
CR: Amazing how you're trying absolutely everything. So after your experience, how far do you think we are from a world where everyone is doing this, where everything is crypto?
PT: My vision of DeFi is that it will not overtake the traditional financial system. They will co-exist. So I don't think that one day everybody will use it, but I think that maybe 10 or 20% of humanity one day will use DeFi. First we need to solve lots of issues, regarding security, private key management, and scalability. All of those issues will be addressed somehow, someday. I think DeFi has a lot of value for countries that don't have a good banking infrastructure, or where the government is bad or where you have dictatorships. Even in Europe most of the time my friends tell me “Okay, but I have Revolut, so why should I care about Dai or whatever.”
I tell them the value for me in Europe, is not that. For me DeFi in Europe isn't only about freedom and about being resistant to censorship, it's also about UX. Honestly, what is a better user experience than to have just one wallet, that you can connect like plug-and-play to a decentralized application. You don't need an account, you don't need to register, you don't need a minimum of money. So for me it's the experience. It's very user centric. Maybe it will start with people in Latin American, Africa and maybe Asia, they will use it because of the censorship resistant aspect, and maybe in the coming years more people will see that it's better than a bank.
CR: To hear you say that you think a value for European users is UX is interesting because I think there's this common perception and I think it comes from user experience on Ethereum dapps was so bad maybe a year ago, so there's this perception that it's really hard and clunky to use dapps.
PT: Before DeFi I was a forex trader. I needed one or two different brokers. I needed one or two banking accounts. Just to move funds between the bank accounts to the broker number one or to the broker number two, it takes days or hours. With DeFi, you just have the wallet, which is your identity, and then you just connect to services. It's platformization of finance. And so for me it's the best user experience you can have. And with DeFi, now thanks to Synthetix, you can go from stock markets to crypto, to lending, with just one click every time.
It defies all the banking apps. All of those companies will never, ever be able to provide this kind of plug-and-play lifestyle. We say blockchain is not user friendly, but I do it, you do it. And also we used to say that it's not scalable, but actually I think the opposite. You see on Twitter, or all the news on your newsletter, there's a new project every two, three days. So this is the most scalable technology.
CR: I agree. And then for European users or developed markets users, do you think also like higher interest rates could be a draw? Or do you think rates will keep kind sliding until it's not much different.
PT: So in Europe we have peer-to-peer lending on centralized platforms that already gives good rates. So a lot of people won't really see the value to lend on DeFi. But time will do the job and and education will do the job and we'll see 10,000 and 100,000 people that will start to get interested. What I tell people, to get them interested in DeFi, is look, the future will be digital anyway. Blockchain is here to stay. So if you wants to grow your wealth, yes, you have to grow your wealth in fiat, but you should also grow your digital wealth. And the best way to grow your digital wealth is to embrace DeFi.