Building any ecosystem from scratch is hard but a financial ecosystem is doubly difficult. There are many factors at play and each component must grow together in tandem, carefully giving and taking from other participants to support the growth of all. It's a delicate task yet it's one our very own Lisa Nestor is keen and capable to tackle. Tune in this week to catch her history and roll in fostering the complex ecosystem developing around Stellar.
Building any ecosystem from scratch is hard but a financial ecosystem is doubly difficult. There are many factors at play and each component must grow together in tandem, carefully giving and taking from other participants to support the growth of all. It's a delicate task yet it's one our very own Lisa Nestor is keen and capable to tackle. Tune in this week to catch her history and roll in fostering the complex ecosystem developing around Stellar.
Lisa Nestor (00:00):
For me, financial inclusion is just helping to get equal access to the system. Regardless of how much money you have or what your lifestyle looks like, you should still have products and services available to you at the same level of ease.
Tyler (00:18):
Hello, Stellar community. Welcome to another episode of the Stellar Podcast. I'm very excited today. We have my colleague, Lisa Nestor, in the house as it were to talk about what she works on at the SDF as part of our efforts in this podcast to create a bit more transparency to what's going on behind the scenes at SDF and the different individuals. We've done a lot of hiring in the past year or more, so there's lots of new faces as well as lots of old faces that have been around for a long time in creating some transparency and exposure to what those individuals are working on, what they're passionate about and what role they play in the mission and vision of the SDF as well as developing Stellar. Lisa, welcome. Fantastic to have you. Very much looking forward to hearing what in the world you do at the Stellar Development Foundation because you, unlike many, have actually been here for quite some time.
Lisa Nestor (01:27):
I have been. That's correct. I like to say I'm one of the more tenured employees on the SDF, but yes, since the summer of 2016, I'm actually coming up on my four-year anniversary in just a couple of weeks.
Tyler (01:43):
That's incredible. So walk us through that. Obviously, you weren't born four years ago, so you have a history beyond Stellar, so maybe talk us through some of that and how you got involved at Stellar and, ultimately, primarily why you're at Stellar.
Lisa Nestor (02:01):
Sure. Yeah. I'm happy to. Certainly, thanks for having me on. I'm excited to be here. I am from North Carolina, born and raised. I spent my first 21 years in that state, so didn't bounce around too much. Before then, I went to Appalachian State University for my undergrad. And then from there I decided to join the Peace Corps, so the United States Peace Corps, where I was sent to Mauritania, West Africa. That I like to think of as being my first job. There in Mauritania I was a small enterprise development volunteer. Mainly that means that my focus area was in business development as a service. And so I did that for two years. In that process I got exposed to this idea of financial inclusion, and it really inspired me, made me really curious, and while I was there had some experiences where I think I saw firsthand the value of financial inclusion.
Lisa Nestor (03:09):
From my time as a Peace Corps volunteer in Mauritania, I then eventually transitioned to India where I worked for a research organization called the Center for microFinance. I was there for three years doing essentially research around financial inclusion. And after three years, it had been about five years living outside of the US, so I decided it was time to come back. And I went to grad school at UCLA at the Anderson School for Business. That's when I finally made my transition out to California and the west coast, did business school for two years, and there actually met a professor who I became quite close with, a gentlemen by the name of Bhagwan Chowdhry, who also has a passion for financial inclusion.
Lisa Nestor (04:02):
And long story short, a year after graduation Professor Chowdhry and I were still very close, and he was simultaneously advising for SDF with Jed and Joyce at the time. And so he started pushing me to check it out. I had no idea what blockchain was. I had never heard of it before, but he introduced me to Jed, started reading about Stellar and talked to Jed. I think just because I was so interested in this broader topic of financial inclusion, I was game. I jumped in even though I was still very early in understanding the technology. And so that's how I ended up getting here.
Tyler (04:41):
Yeah, very cool. When I think of financial inclusion, I think of blockchain, but you came to it afterwards, so maybe give us a definition of what you consider financial inclusion to mean. And then along with that, how does financial inclusion work in a pre blockchain cryptocurrency world?
Lisa Nestor (05:04):
For me, financial inclusion is just helping to get equal access to the system. Regardless of how much money you have or what your lifestyle looks like, you should still have products and services available to you at the same level of ease. That being said, it's really complex, right? That's why I think financial inclusion is such an interesting topic because when you go to a rural village somewhere, there's so many constraints for how you can actually build a service there that can be anywhere equivalent to something like I have in Los Angeles, so it's combining this just very difficult practical, solve a problem in the environment that you are, But then also this bigger picture understanding that once you open these gates and you let money move in and out of these economies and help people get access to this system, that there's so much benefit that's going to come from it.
Lisa Nestor (06:02):
But you're certainly right. A lot of financial inclusion is offline. In fact, the first project that I worked on it's called a village savings and lending association. It's literally a metal box that has three places where you can put on locks, three distinct locks and three distinct keys. And this is our multisig savings account. And so what happens is that in a village savings and loan association you'll gather people from local town or village or community. The group sizes are typically 10 to 30, and you will have these groups save their money using this metal box. And typically, this is used when there's not local bank accounts, right? So in my our local bank services.
Lisa Nestor (06:56):
In my village in Mauritania, the closest real bank was an hour drive away. It might as well have been six hours away for most people. That's not something you can just go drive to for the day. In lieu of having a local place to safely save money, these types of services work really well, so a group of people comes together every week or every other week, they all save money, you have a book where you're keeping this record and basically then you start loaning out the money to group members, so maybe everyone saves and then you loan out to two or three people, and those people payback and you just keep cycling funds through. And this way where you have a secure savings box, an account record of what's moving in and out, and then people are just lending to each other.
Lisa Nestor (07:45):
It's a super simple design but really effective because without these types of services, it's very difficult for an individual household to be able to get access to a lump sum of money at one time. But with something like this, let's say there's just a year-long cycle for this, you actually get access to lump sums of capital twice annually now when you take out your loan and then you're repaying it back over time. And then at the end of the cycle, you have accumulated savings. And so this can really dramatically impact the economics at the household level. Now you can invest in a roof. Now you can have an emergency fund. You can do these certain things that were much more difficult to do.
Lisa Nestor (08:32):
That's an example of an offline non-blockchain financial inclusion project that I think is really cool, and then you just imagine connecting something like that to an internet network so that now there's a very local service that meets the lifestyle needs in the context of those people, but suddenly data and transactions can be moved or stored in a way that makes that little local economy somehow connected to the rest of the world. And I think those are really exciting ideas.
Tyler (09:08):
Yeah, that's super interesting. And I think it's really important to start at practical real-world use cases and then address if and how blockchain technology, the internet can improve those systems rather than doing it in reverse and saying everything needs blockchain, everything needs the internet, and then trying to force fit those two things together. You have to start with the problem first and then address which tool that exists could actually make this problem easier or alleviate it altogether. That obviously leads us to where you are now at Stellar, so maybe define and then describe your role and then some of the projects that you've been working on, which I assume are along some of these veins of transitioning a lock box with three physical locks on it to a multisig situation or really expanding what you can spend money on beyond just where your feet can walk.
Lisa Nestor (10:08):
Yeah, totally. My role at Stellar is senior strategist on the ecosystem team. I guess, I think to explain what I do, it's a little bit helpful to touch on what I did. I had the pleasure of working on our partnerships and business development team for my first three years at Stellar, so I spent a lot of time bringing new companies into our network and ecosystem, but at the beginning of 2019, we began to have this really interesting and great ... I don't want to say problem but change in our landscape where suddenly we realized that we had this active ecosystem. We had enterprises and companies that weren't ... They didn't need to integrate onto Stellar. They were already on Stellar, but we thought there would be a lot of value in working with them to help grow and expand their usage of the network. Because of that, that's why I switched over to our ecosystem team.
Lisa Nestor (11:21):
Now predominantly I work with a range of companies within our ecosystem, a lot of the core players, and help to build out or launch or support their growth and usage of Stellar. I think a way that I like to explain this that is a little silly, but with Stellar, you have companies come on, they launch anchor services, but with the transaction, you're always going to have at least two players typically, a beginning and endpoint. We have liquidity. That's part of this on the Stellar network. Oftentimes there may be third party applications that are also utilizing or running these anchor services. I like to think of myself as helping to bake the pie.
Lisa Nestor (12:14):
We have all of these different pieces that exist in our coming together on Stellar, and one of the last steps is just to make sure that they all get put together in a way that works really well, works really smoothly, and it can just continue to scale. That's what I get to do. Specifically over the last I would say about nine months, I've been very focused on growing our Nigeria corridor, so working with anchor services there and helping to support payments between Europe and Nigeria, and then also getting more applications or other Stellar anchors to start utilizing these services.
Lisa Nestor (12:59):
Right now I'm focused on doing similar things for the Brazil market and then just generally serving the Stellar ecosystem and seeing if there are other types of companies that can provide support across the board. My colleague, [Tomer 00:13:22], came up with this great concept of a minimal viable ecosystem. On the ecosystem team, as you know, we can think of that on multiple layers. There's certainly technical aspects or technical infrastructure that we want as part of our minimal viable ecosystem, but there's also enterprise layer things that if a company that provides certain types of services can offer that to any company that's using Stellar, there's value for everyone that's involved. I also look for opportunities to bring on those types of partners or bring in those types of deals that can provide business layer services that's beneficial for companies across the Stellar ecosystem.
Tyler (14:15):
It sounds amazing and exactly what we need, but I think it can be a little bit abstract. The analogy of baking the pie is really good, but maybe walk us through a real-world use case example of how different actual entities which we have are working together to begin to create this pie, if you will.
Lisa Nestor (14:39):
This delicious cross-border payment pie. Big flip love. Yeah, let's just dive into the Nigeria example because I think that's pretty fresh and an interesting one. The story of are the growth of our Nigeria corridor really began I would say about 18 months ago. A prior colleague of mine, a gentleman by the name of [Tunde 00:15:11], had worked with one of our Nigeria anchor partner, Cowrie services, in the past. But around the summer I believe of 2018 we started to notice some volume around this Nigerian naira that had been issued on the Stellar network. We reached back out to that team, and we were just really impressed with the anchor service they had set up.
Lisa Nestor (15:41):
From a technical standpoint, it was really high quality. The team itself had a lot of vision. It had really great local connections. It could facilitate deposit and withdraw between their anchor service and the Nigerian interbank settlement system in 30 seconds, very low fees. Now essentially what we have is we'll say dominant corridor on Stellar where we're sending payments from Nigeria to Europe, corporate payments, and we utilize liquidity on the Stellar decks as well as liquidity from external exchanges in order to circulate our funds. We're really excited about the growth of this. We're doing around half a million a week right now in payments across the network for this corridor. And we're also now really pushing to grow our payments the other direction, so we want to now increase payments into Nigeria.
Lisa Nestor (16:44):
And we think we can do that because we have really great rates on the network. Again, we have really fast processing times and low fees, so it's just a matter of finding the right types of customers. I think remittance companies are a great candidate who are looking to send payments from Europe or the US, for example, into Nigeria. And as we're able to do that, we'll be able to balance out our flows even more and grow this corridor more and more. And then as the next step, we're looking to do something similar for the US market, so sending payments from Nigeria to the US as well as hopefully a couple of other corridors like the UK and Canada.
Lisa Nestor (17:22):
A big part of this process was also the development of SEP 31 as a new ecosystem standard. I think that's important to flag because it was really critical for this process. When we started I said we hacked together our first flows. Obviously, KYC, know your customer regulations, and anti-money laundering regulations are really important part of cross-border payments. When we have a distinct sender and receiver, a business in Nigeria and another business in Europe, we need to have a lot of care in making sure that these details are shared between the two entities and processed in the right way.
Lisa Nestor (18:08):
We started using SEP 24, which is a very common substandard. Many of your listeners probably are familiar with, and it worked, but it wasn't ideal. It's more focused on having the same person put funds into the network and take funds out. And so we work together with the SDF integration team to develop what is now SEP 31, which is basically a more seamless way to have a distinct sender and a distinct receiver and to process that transaction between two anchor endpoints. And it's great because now this is something that any new anchor, any new company can take advantage of and they can launch this style of payments even faster. That was another really important part of scaling up this specific payment flow.
Tyler (18:54):
Yeah, definitely important to call those kinds of things out because ultimately Stellar is not a bunch of isolated entities all operating only within their own interests. The whole idea is interoperability.
Lisa Nestor (19:07):
Absolutely.
Tyler (19:07):
And the way that happens is through Stellar ecosystem proposals where we're all talking about and deciding on standards by which similar entities can interoperate with one another. So yeah, a critical point of making these things work and allowing other entities to jump right in because they know that if they plug in to the same socket, if you will, they'll get the same power and access that everybody else has.
Lisa Nestor (19:36):
Absolutely. That is how you ensure we deliver a truly open financial network, in my opinion, by doing the hard work upfront to set standards that really allow for people to plug and play and easily access everything on Stellar.
Tyler (19:54):
Yeah. Very cool. That's something that you've been working on in the past that recently has really been coming to fruition. What excites you about the future? What has recently been coming out, and what's coming up on your radar that you're super excited about? Where do you see the future of Stellar going over the next year or so?
Lisa Nestor (20:15):
Yeah, it's really exciting. I guess, I am really excited about building out our corridor. We have some really fantastic partners there. I think there's just going to be a lot of growth around remittances to that market. But I think if I'm going to take a bigger step back, something that really excites me about the network now is the number of apps and products that I see starting to use anchor endpoints and assets on Stellar. I also think that that's a really important metric for our ecosystem. I'm lucky enough to get to do a onboarding session for all new employees at SDF. And as part of this onboarding session, I always show this slide and I say, "This is a really important slide."
Lisa Nestor (21:21):
And it looks like a food pyramid, if anyone's familiar with that, but the layers are a little different. I'm not talking with carbs in the bottom layer. Instead, I explain that Stellar's value isn't just this blockchain, right? That is a fundamental part of the value proposition, but Stellar's value is really much more layered than that. There's really this ecosystem. That is what someone is using when they say that they're going to use Stellar. And by that, I mean we have this blockchain network, the fundamental technology layer. The layer above that is you have these anchor services and various assets in the Stellar ecosystem. And this allows money to move in and out of the network. Importantly, it allows the money people hold in the world today like currencies, for example, to move in and out of the Stellar network, allowing those people to get the benefits of this technology.
Lisa Nestor (22:34):
But then even if you have the best anchors and assets in the world, you still need good liquidity, right? You need good markets so that if you really want to do a cross-border payment, you get good rates, and you can actually do that. So now the layers are the blockchain layer, the anchors and the assets, and then liquidity on the network. And then once you have those three things, you can actually start building third party products that are just consuming those anchor services and the liquidity and the assets. They don't have to be the anchor endpoint themselves. They can just be a team of three developers somewhere in the world that want to launch a product that is consuming this network anchor services and liquidity.
Lisa Nestor (23:23):
I've seen growth in the number of those types of projects, those third party app style projects. And that's really exciting for me because I see that as being something that can really lead to exponential growth, and I think it shows that we're really starting to deliver on this ecosystem value proposition, right? It really is starting to come true that I can think of a really cool product and build it and allow my users to start holding value or moving value around the world without having to be this licensed financial institution, without having to set up all this infrastructure myself. I can just do an integration onto Stellar and move forward. That is very exciting for me and I think where we're going to see a lot of growth over the next year or two.
Tyler (24:16):
Yeah. And it's a really important structure I think the pyramid, understanding that there is a trajectory here. It's not necessarily, I think, a chicken or an egg. We're not going to do anchor services unless there's users. It's no, we need anchor services first and then we get users on top of that, but really understanding ultimately if you don't have value on the network, there's nothing to do. There's nothing to move around. And so you have to have an anchor service that allows you to move actual value that you already have and put it into a digital format. But once you have that, now what do you do with it? Because you're not just going to pull it back out. You actually want to make transactions.
Tyler (24:59):
I mean, it's that idea that if I have $10, I have that $10 and I've got 10 friends. We don't need anything else. We can just continue to circulate that $10 amongst us as we all do each other's chores and buy each other pizza and stuff or whatever. But somehow you have to get that $10 in before you can start to circulate it.
Lisa Nestor (25:19):
Totally.
Tyler (25:20):
And with Stellar, you have that same scenario where first we have to get value in. We have to move money into the system. But once we have money in the system, now we need to actually create services around moving that value around.
Lisa Nestor (25:34):
Totally.
Tyler (25:34):
Both of those things are necessary, but one does come before the other. Because if I can't get value in, there's no reason to transfer these things. There's nothing to transfer, nothing valuable anyway. But once you have that, then you start to see all the apps moving that value around in different ways, but both are distinct and both are valuable. And it is really cool because you start to see, "Ah, we're finally starting to see some maturity here in the system. We're finally starting to see some methods for moving value in. And now that that value is in, we're starting to see companies build on top of that and allow the transfer of value."
Lisa Nestor (26:10):
Totally.
Tyler (26:10):
Which is super exciting as people recognize that and began to build services, which I'm going to tee up DSTOQ for you to close this out. Talk a little bit about DSTOQ, which recently we did an episode with, and you were a huge player in getting them onto the system, but one of those platforms that really allows the transfer of value. I mean, they're not an anchor, but they're allowing the transfer of value, which is super exciting. And they're not a small player. They're a mature, very well-built application.
Lisa Nestor (26:46):
Yeah, absolutely. You're totally right that DSTOQ is a great example of exactly what I was talking about, and I'm super excited about their product and launch. DSTOQ is tokenizing some assets on Stellar. They're tokenizing securities. However, they're then a consumer of anchor services from around the world, right? Basically, the DSTOQ value proposition is to enable the purchase of US-based securities anywhere in the world and at price points that are accessible to really anyone, so the ability to buy a dollar worth of Apple stock, for example, and start essentially having access to the super high quality assets for people anywhere and all over the world.
Lisa Nestor (27:49):
They are getting ready for launch here at the end of June. They have plans to launch in Nigeria as one of their initial markets, which I'm super excited about. And this is another example of what I think is very exciting when we see people consuming really great existing anchor services and Stellar and a couple other markets as well. I think we're all holding our breath to see what the other side of this is like, but I think what's really exciting about DSTOQ is that they're both using Stellar in a really exciting way, both tokenizing really interesting assets, also using anchor services, but they are also building this super user-friendly relatively simple app for users that is providing a complex value proposition but in a really simple way and totally abstracting from, "This is a blockchain, and this is a token, and you're using an anchor service."
Lisa Nestor (28:58):
It's sophisticated but still very approachable product that has the potential to be used in so many places around the world. I'm just really excited about both getting out the door and seeing the launch move forward and then just watching the growth as well.
Tyler (29:17):
Yeah, absolutely. I was blown away when I did the interview with them a couple of weeks ago. Just amazing service with an incredible vision. I think they really understand their users. They understand the technology fantastically, but if you don't also and equally well understand your users, you're going to fall flat because users they didn't the software. They don't get that piece of it, so you have to understand where they're coming from to build something that's actually usable, and they do, so I'm very excited as well.
Lisa Nestor (29:49):
Absolutely.
Tyler (29:51):
Well, this has been fantastic. I appreciate you coming on so much. Lots and lots of good content here.
Lisa Nestor (29:57):
I appreciate you, Tyler.
Tyler (29:59):
Thank you. I appreciate you appreciating me. Hopefully, in the next little while we'll have you back on to talk about all our successes in the ecosystem team around these things that we've been talking about.
Lisa Nestor (30:11):
Absolutely.
Tyler (30:12):
Thanks so much for jumping on. This was really good.
Lisa Nestor (30:15):
Thank you. Have a great day.
Tyler (30:24):
For more information about Stellar and the future of decentralized finance, visit Stellar.org and get involved in the discussion in one of our active communities on keybase@stellar.public or Stellar stock exchange. Until next time, I'm your host Tyler van der Hoeven. I'll catch you all later.