The chief executive of stablecoin issuer Circle says the convergence of three technologies will enable people to receive loans at a pace never seen before.
In a new interview on the All-In Podcast, Jeremy Allaire says digital dollars like USDC will fully power software-based credit markets, removing many of the frictions that slow lending today.
According to Allaire, stablecoins make it possible to underwrite real economic activity directly, while pricing risk and insurance algorithmically.
“If you have these digital cash things, like USDC, you can create lending protocols that are lending for, ‘I want to hire a new employee, or I need some new equipment for my kitchen in my restaurant.’ All these forms of lending can be done. And the risk that is taken, there’s real risk there, can be underwritten. And the insurance on the risks failing can be priced. And so you can build credit markets entirely in software.”
Allaire says the real acceleration comes when AI is layered on top of smart contracts and blockchain infrastructure, creating what he describes as a powerful new environment for credit innovation.
“AI plus these smart contract machines and stablecoins, I think, create a really interesting little cauldron for credit market innovation. And I have a gleam in my eye, which is imagine a credit market that worked like AdWords. Imagine something that was that efficient and could clear and settle credit decisions at the speed at which an auction happens for attention. And so those kinds of things will become possible.”
Google Ad auctions are incredibly fast, happening in less than 100 milliseconds for each search query.
Allaire adds that faster, software-driven credit markets would increase money velocity across the economy, allowing capital to move more efficiently to where it is needed. He says AI-powered credit intermediation could unlock growth by reducing friction in how value is exchanged over time.
“So money velocity increases, and I think these kinds of credit intermediation models powered by AI and blockchain networks can actually further increase money velocity… People, a lot of times, they think exchange of value means, ‘Oh, like making a payment.’
No. Value exchange is the time value of money transformation. And it’s ‘I have value I don’t need right now. You have a need for that value. And I’m going to use the time to transform that and then create new things from it.’ And that’s where actual growth comes from.”
The value transformation being described by Allaire is happening right now in the world of decentralized finance (DeFi), where owners of a crypto asset, such as Bitcoin, deposit their coins into a protocol to earn interest on their holdings. Other users borrow the coins for trading and other purposes, while posting stablecoins such as USDC as collateral.
All transactions happen on the blockchain without an outside intermediary.
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