From the Fault Line No.0
The Stablecoin Stack in Africa, Criss-cross Competition, Stripe Treasury, Hyperliquid + Kalshi + US Agricultural Industry, Hyperbridge Hack
Hi Friends 👋
Welcome and thank you reading this pilot From the Fault Line newsletter!
LAVA has an internal chat called Fault Line where we drop links + one liners to help our team build our hivemind. Though it’s not mandatory to read every link in there, it’s a tried way to know where our team’s headspace is at.
I wanted to open up the links flowing through Fault Line, curate, and add some commentary that you get a flavor of how our mind works. I hope it’ll lead to deeper and more engaging conversations with the world outside LAVA.
Links & Listens
🪙 On the Stablecoin Stack in Africa | Yoseph Ayele, Noah Levine, Guy Wuollet, Robert Hackett | a16z crypto
Liquidity as Constraint
This weekend I spent every spare minute gorging over The Goal because I wanted to identify my personal constraints as it relates to my role at LAVA. The essence behind the Theory of Constraints is that you must focus the organization around identified constraints.
Looking across players in the African FX value chain in this light, liquidity is the constraint AND the moat. Technical prowess, by itself, is not a moat. The companies ahead of the pack have built a liquidity advantage. Some even at the cost of severe equity dilution because it’s what allows one to command control over the value chain.FX Liquidity Squeeze
Movement towards market liberalization such as Ethiopia opening up its insurance sector for foreign investment, excites me considering how closely insurance is tied to credit.
Yet, the same government sends mixed signals that squeeze liquidity by suspending products which power open markets:
The road ahead will be bumpy. We’ve placed our bets that liquidity will find a way.
On a lighter note, proud to see our portcos HoneyCoin and Accrue, as well as Juicyway, Yellow Card, Afriex on the market map!
🤝 Financial Revolution. Everywhere, All at Once? | Brian Armstrong | Nium x Coinbase Partnership
Whenever I see an existing established player, whether TradFi, Fintech or Crypto, partner this way, I can’t help but wonder:
“Who are they and what do they offer that [insert big company] would partner with them?”
“What does LAVA and our portcos need to do to partner with players like that?”
“Though the announcements say 190+ countries, which players are making this possible quietly in the background for Africa and what’s really happening on the ground?”
Then a bit more sleuthing tells me Nium has been around since 2014, and I came across them at GFTN Forum, Japan back in March. An L for me not recognizing them.
A few years ago TradFi, Fintech, and Crypto businesses stayed in their own lane. More regulatory clarity brought in both more incumbents and new players. The lanes are being criss-crossed every which way. I feel like I know less than when I started looking into crypto in Africa as I’m less certain where the change for Africa’s financial future will spring from.
🏦Sounds and Looks Like a Bank | Stripe
“Agentic commerce” was front and center at Stripe Sessions, and on Day 2 Stripe launched Stripe Treasury.
It does everything a bank does. Except Stripe’s not a bank.
I’m a sucker for definitions so when a project calls itself a “neobank” my reaction is to put a fire under them.
Stripe Treasury is beautiful in several ways:
Stripe, as a licensed money transmitter, does not hold anyone’s money but the FDIC-insured institutions do.
Stripe has never had (and still doesn’t have) a bank charter. But they do offer “credits” that you can earn to apply towards Stripe fees.
Stripe’s acquisition of Bridge allows Stripe to essentially be a bank on the stablecoin side and the partner banks handle the fiat side.
Vertical integration has never looked more stunning.
💹Not Perpetual, Yet | Haseeb Qureshi | Hyperliquid
The tech nature of crypto means when we see a fence, we kick it down and keep walking.
Because Hyperliquid’s commodity contracts are open all the time, Kalshi probably thought they could launch event contracts on corn, wheat, and the rest—open around the clock.
The agricultural industry pushed back hard, and Kalshi stopped.
Though we have the crypto primitive that enables commodities to be traded 24/7/365, for now, the market is anchored by the industry it serves. The industry built its risk playbook around CME hours, and they’re not prepared to adapt.
Kalshi’s edge is compliance and US focus; Hyperliquid’s is permissionlessness, onchain and therefore global.
It’s going to take some time for people to realize there was no fence to start with.
⚠️Intents In; Bridges Out | Pashov Audit Group | Hyperbridge
Hyperbridge was one of few African projects that had their token trading in the market. I was rooting for them because, if they survived, they could have demonstrated how token projects from low-liquidity markets can capture value to succeed.
Condolences to the Hyperbridge team and community. Can’t imagine the fire you’re putting out.
What’s Next
That’s all for this first stab. Thanks for reading this far.
Any feedback, advice, thoughts, and dunks are welcome.
I leave you with Jeff Bezos’ reflection on fundraising Amazon’s seed round.
