In Episode 160 of the Disruptors for Good podcast, we speak with the Co-founders of Glo, on using blockchain to end extreme poverty through a fully backed stablecoin.

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Glo is a nonprofit that thinks and operates like a startup. Glo has raised a $2 million seed donation from a personal donation by Sid Sijbrandij (co-founder and CEO of GitLab Inc.). Their operational costs and employee salaries run on philanthropic donations.

What is Glo?

Glo is a US dollar-pegged stablecoin that not only gives back to those in need, but also allows you to put your money where it matters most: directly into the hands of impoverished people around the world.

Simply by owning money in the form of Glo, you generate new money which then goes to people living in extreme poverty.

How Does Glo Work?(example)

• You send them $1000.
• In return, they create 1000 Glo and sends it to you.
• Glo is a cryptocurrency, so they send the 1000 Glo on the blockchain and you receive it in your crypto wallet.
• Glo puts your $1000 in the Glo reserve. Keeping it there is how they make sure your 1000 Glo stays worth $1000. Every Glo that exists is backed by one US dollar in the Glo reserve.
• You can always convert your Glo back to regular US dollars if you need the money, so you’re not losing any money in the process.
• So how does Glo generate basic income? Glo doesn’t literally keep your $1000 sitting in a bank account. They invest a part of it in 3-month Treasury-bills(T-bills), a type of US government bond.
• 3-month T-bills are about the least risky investment you can think of. For that reason, they are often categorized as “cash or cash equivalents”.
• Still, they generate a small interest. This varies, but a rough assumption is that the Glo reserve will return about 2.5% per year on average. That means every $1000 in the Glo reserve generates $25 per year of profit.
• They give 100% of this profit away as basic income to people living in extreme poverty.
• Each recipient gets $1 a day, which is often enough to lift them above the extreme poverty line.

What are Three-month US Treasury Bills?

Three-month US Treasury Bills, more commonly known as “T-Bills”, are one of the lowest risk types of investments available. They are short-term debt securities issued by the US government and backed by its full faith and credit.

T-Bills have a maturity date of no more than 12 months and are sold in denominations ranging from $100 to $1 million.

T-Bills are issued through competitive bidding at auctions held on a regular basis, usually every week or so. The amount of interest you earn on your investment depends on the market rate when you buy it – generally speaking, the return is lower than other forms of government debt with longer maturities such as notes and bonds.

When you invest in T-Bills, you don’t have to pay any commissions or fees, which makes them attractive to investors who want an easy way to invest without spending money up front.

Ultimately, investing in three month US Treasury Bills is meant to be a low risk investment that offers easy access to funds when needed with no fees or commissions involved.

How Does Glo Get the Money to Recipients in Extreme Poverty?

This is done by distributing the basic income by donating the profits to GiveDirectly, an NGO specialized in direct cash transfers to people living in poverty.

For ten years, the organization has been providing direct cash transfers that enable recipients of these funds to be lifted out of extreme poverty.

Is it Considered a Donation When I Send Money to Glo?

No, it is not considered a donation, the innovation of this stablecoin is that it allows you to financially contribute without actually giving any money away!

At any point you can exchange your Glo dollars for US dollars.

Will Glo Will Have a Low Environmental Impact?

Yes, the mission it to build an energy efficient cryptocurrency using Ethereum and Polygon.

Recently, Ethereum completed a transition from a proof-of-work to a proof-of-stake consensus mechanism.

The Ethereum foundation estimates that this move will lower Ethereum’s energy consumption by ~99.95%.

As for Polygon, they have committed to going carbon negative.

In June 2022, Polygon achieved lifetime carbon neutrality by partnering with KlimaDAO to retire $400,000 of carbon credits. This is the first step on Polygon’s path towards being carbon negative.

Overall, this means buying and transacting Glo will not cost a lot of energy at the moment, and in the future it will use even less energy as these platforms mature and as the energy grid goes through its own innovations.

Interview Transcript

00:09

Host: Well, thank you for joining me today. We’re going to go into the weeds on a lot of different things. Ending extreme poverty is obviously a big task and journey. As we see the world of finance changing and how we get money across the world to deliver impact, crypto has a lot of potential. Before we get into stablecoin and what Glow is, its mission, and vision, let’s talk a bit about each of your backgrounds. Jeff, we’ll start with you. What brought you into starting Glow and getting into this mission of solving extreme poverty?

00:50

Jeff: Yeah, absolutely. Thanks for having us. I really appreciate it. It was two summers ago, in the summer of 2021, when I met a friend who had an idea about using cryptocurrency to generate basic income and help solve extreme poverty. This idea came from donating to GiveDirectly and seeing the impact. The question was, could we build a sustainable way to generate money using cryptocurrency to make a huge impact on solving extreme poverty? It started as a white paper shared with me, and I joined as a consultant before deciding to jump on as the CEO to build a startup around this idea. My background is in academia, teaching finance, economics, and blockchain FinTech courses, and I thought this problem was really interesting and important to work on.

02:13

Host: How did the academic community react when you said, “I’m leaving for a cryptocurrency startup”?

02:20

Jeff: The reaction was pretty positive. It’s an ambitious idea and aligns with academic thinking about models, mechanisms, and theories around constructing economies and building institutions. It was exciting to shift to a startup mindset and build something people will use.

03:04

Host: Jasper, you want to jump in and talk about your journey real quick?

03:06

Jasper: Definitely. My background is in computer science and artificial intelligence, on the technology side. I moved away from technology gradually, becoming a product manager at a FinTech startup, which got me more into money. At first, I considered money boring, but I realized its deeper implications on people’s lives. My career in FinTech and crypto seemed disconnected from my ideals until I heard about Glow, which aligns cryptocurrency with basic income and economic equality. It was a blessing.

04:43

Host: How do you explain Glow to someone who might not be familiar with crypto?

05:17

Jasper: Explaining to non-crypto people is more challenging but rewarding. Think about extreme poverty as a major problem with a simple solution: giving money, like $35-$40 a month, to those in need. The challenge is scaling this solution. Traditional basic income programs rely on donations or foreign aid, but there isn’t enough to scale. Glow’s answer is embedding philanthropy in the currency itself, so using Glow dollars does good. We use cryptocurrency because it’s a way to create a new kind of money. While crypto has had a negative image lately, the essence of what we’re doing is about changing how money works.

07:51

Jeff: Glow dollars are pegged to $1, unlike cryptocurrencies like Bitcoin and Ethereum, which fluctuate in value. Glow is a fully backed stablecoin, meaning we take in actual dollars to support the value one-to-one, creating a sustainable mechanism to generate income and solve extreme poverty.

08:26

Host: Let’s talk more about the difference between Glow and other cryptocurrencies like Bitcoin and Ethereum.

08:49

Jeff: Stablecoins are pegged to a stable value, like the US dollar. Unlike Bitcoin and Ethereum, which are native cryptocurrencies of their respective blockchains and fluctuate in value, Glow dollars are fully backed by actual dollars held in reserve. This makes them a more stable form of cryptocurrency, ideal for creating a sustainable impact.

10:02

Host: How does Glow work for individuals or companies? How do you get money into Glow?

10:27

Jasper: Think of Glow like Patagonia, which donates its profits to climate causes. You send us $1,000, we give you $1,000 Glow dollars, and we invest your money in US Treasury bills. The interest earned from these investments is donated, making your money work for philanthropy without losing purchasing power. It’s like putting money in a bank, but the interest goes to ending extreme poverty instead of bank profits.

13:24

Jeff: It’s similar to how banks operate, but with a 100% reserve backing. Glow is a nonprofit, ensuring that all interest earned goes directly to ending extreme poverty rather than to shareholders. This structure aligns our mission with our operations, creating a transparent and impactful financial model.

15:03

Host: Why did you choose GiveDirectly as your partner for distributing funds?

15:54

Jeff: GiveDirectly has a proven track record of effectively distributing cash transfers and showing the impact of these transfers. They conduct thorough research and have a solid operational process. We appreciate their model of giving people the autonomy to use the money as they see fit. While we don’t have a formal partnership with them, we’re aligned in our mission and trust their ability to make a difference.

17:51

Jasper: We believe in GiveDirectly’s impact and their ability to use donations effectively. While there are criticisms and challenges, increasing the amount of money going to these causes is a net positive. We’re focusing on creating an additional income stream for GiveDirectly to expand their reach and impact.

19:21

Host: What’s the roadmap for Glow in 2023? How can people or companies participate?

25:57

Jasper: This week, we’re doing our soft launch, testing our platform with one company. If all goes well, we’ll launch early next year for companies. Individuals will be able to buy Glow dollars through crypto exchanges like Binance, Kraken, and Coinbase. We aim to build a dashboard to show the impact of owning Glow dollars and partner with payment platforms to make Glow dollars useful in daily transactions.

29:15

Jeff: Early access will be available on decentralized exchanges like Uniswap. Any outstanding supply of Glow benefits income generation, as it increases the reserve assets. Companies can create accounts and issue Glow dollars, while individuals will have access points to buy through exchanges and DeFi protocols.

31:11

Host: How have recent events like the FTX collapse affected your conversations with potential partners?

32:30

Jasper: Trust is more important than ever. While we face skepticism, once we have conversations and explain our model, people generally see the value. It’s about building trust through transparency and clear communication.

33:37

Jeff: Recent events have highlighted the need for transparency and proof of reserves. We’re committed to showing that Glow is different from other unstable cryptocurrencies. Building trust and emphasizing our nonprofit mission are key to gaining support.

34:48

Host: What does success look like for Glow in the next three to five years?

35:04

Jasper: Success is when Glow is seen as a standard form of money that people use in their daily lives, and everyone knows that using Glow dollars helps combat extreme poverty. We want it to be a no-brainer for people who care about this cause.

35:51

Jeff: We aim for Glow to have significant market cap growth, being used globally by companies and individuals. The potential for scale is massive, and we want to leverage blockchain technology to make money that represents more than just value transfer.

37:09

Host: Any final thoughts for our listeners?

38:55

Jasper: If you’re inspired by Glow, join our waitlist at glowdollar.org/dfg. We need early adopters to set the example and help start this movement. Your support can inspire others and help us make a significant impact.

40:23

Host: Thank you, Jasper and Jeff. It’s been an awesome conversation. We’d love to have you back on next year to see the progress. Best of luck to you and the team.

41:43

Jeff: Thanks so much. We appreciate being on the show.

41:56

Jasper: Thanks a lot. It was great talking with you.

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