By Darren Parkin
Remi Tuyaerts is no stranger to start-ups. While studying at Nottingham University, he used an exchange year to work on a series of social entrepreneurships in Malaysia. Holding a position of COO for the student project he oversaw the setting up of three self-sustaining projects involving the local populations setting up a black soldier fly farm to eat organic waste (and using the larvae as food for local animals), setting up a mushroom farm in abandoned houses and another project which converted plastics into beanbags and employed homeless people.
While he first came across Bitcoin in his first year in university, it wasn’t until his final year as a computer scientist that the technology really interested him. With two other fellow students he set up a platform to provide credit for small and medium sized companies. His two fellow students knew nothing about technology and he knew nothing about finance, all three went on a journey that led them to a successful exit for a company that had great ideas but no actual turnover three years later.
“We did look at blockchain as part of the solution but this was in 2017 and it just wasn’t ready.”
Tuyaerts stayed on as CTO for a period until the business was acquired by a Dutch bank with 350 employees. At this stage he wasn’t getting his hands dirty anymore and he wanted to build again.
“This was 2021 and I felt blockchain technology was now ready for mass adoption. The promise of blockchain to decentralise money in a non-custodial fashion was exciting – and I don’t mean Metamask being used by 10 million people but rather the ability to deliver a Web2 fintech kind of experience that would be used by hundreds of millions of people.”
Tuyaerts understands that it is difficult to build a consumer proposition that really sticks to the principles of Web3.
“I really wanted to democratise access to financial services so that someone in Rwanda can have the same access as someone in the UK. In a world where we can call someone for free halfway across the world, why can’t someone in Africa not be able to open a bank account, not be able to access a credit card, buy stuff online, or get a loan or mortgage.”
And so Tuyaerts set himself the challenge of creating a financial platform that someone in Central Africa can use in the same way as the UK.
In Alluo he is building two main things. The first is a noncustodial mobile wallet that looks and feels like a ‘neobank’. The mobile app is available on IOS and Android. This has been live since February.
“It acts as through you are just depositing money to earn interest but in reality, there are a series of onramps to convert your money into crypto. Alluo is a DAO and we don’t hold any financial licenses since we don’t touch any fiat money.”
Tuyaerts has deliberately made the app not feel like crypto and to appeal to the average Joe Soap.
“All the aspects of crypto are there if you want to look for your private keys etc but you don’t have to if you don’t want to.”
Currently Alluo is offering around 5% interest on US dollars. In the coming weeks, they are offering a streaming service where someone can pay another person say $100 but streamed second by second over a two-month period. The benefit to streaming rather than paying the lump sum is that the original person can continue to earn interest on the dimensioning amount.
“It’s like a subscription fee where you pay your friend every second.”
Tuyaerts confirms that everything is transparent and anyone with crypto knowledge can view all the transactions on chain. Alluo doesn’t even have a backend. Unlike previously failed CeFi experiments with pretty front ends but with custodial backends that gave custody to the platform, Alluo doesn’t even have a server so there is no way they could at a future point take control of the users’ deposits.
Previous CeFI experiments have been criticised for giving high returns without revealing how they were earning these figures, again Alluo addresses these concerns head on.
“We operate a liquidity direction protocol which is controlled by Alluo coin holders. The Alluo coin is tradable on main exchanges such as Uniswap. The deposits are then directed into different DeFi platforms voted by the community of Alluo token holders. Currently we direct liquidity into Curve, Convex and Harvest.
“Under current conditions we are earning on average 10% APR, 7% of which is given to the mobile app depositors, the remainder to the voters. The vote, execution of the vote and redistribution of rewards happens fully on chain and is fully transparent “
Again the comparison to the risky appetite for the failed CeFi projects comes into view but Tuyaerts points out it was the lack of transparency and reporting that was the biggest failure of CeFi.
“At Alluo it is less than we manage our risk better but more that the risk taken is visible on chain. We use game theory to manage this risk. The community can say stop, go, or continue and so we do.”
Alluo as a result has two users. The first is the non-tech, non-crypto person who just wants to use the platform as a savings account. The second is a crypto person who understands blockchain and wants to get involved risk management.
“We are doing a lot of education and want to bring these two users closer together but we are a long way off that.”
As of October 2022, some 250 people hold the Alluo token and have the power to vote. The DAO is permissionless and so anyone holding the token can vote. So far the DAO has been conservative opting to attract capital by offering 7% but also making low risk investments. This has led to the Alluo Treasury subsidizing part of the return in a calculated risk.
“Consider it a customer acquisition cost which we hope, as more customers come in, we will generate enough deposits to push the interest back into a positive condition.”
Funds into the Alluo Treasury were raised via a pre token sale in January 2022 which raised $5 million from a range of investors as well as VCs and Angel investors.
Tuyaerts has no idea who the 250 investors are but again uses game theory to steer the ship. If people hold Alluo tokens then they can stake their tokens and vote. If they don’t bother to stake and vote they neither lose nor win, but if they stake successfully then they earn in the pay-out, and in the same way if the stake is unsuccessful then they stand to lose their staked amount.
“The Alluo platform is completely managed by the community. So, for example, if someone voted for a coin offering huge returns – they might earn in the short term but then when there is a rug-pull (and those crazy yields are always going to rug-pull) anyone with tokens staked will lose them.
“It’s the same everywhere. Someone with deep pockets could theoretically buy up most of the staked Ethereum but that would only crash the token and they’d lose their money – so who would do that?”
Tuyaerts and Alluo are looking to find a solution to provide easy access to financial systems for anyone living anywhere in the world. He doesn’t think the financial industry is that bad, nor that the financial products are that bad.
“The issue is that normal people don’t have access. And normal people need to be able to have transparency to understand what is happening. We are working with Web3 to offer similar – familiar products – for everyone to use. Access and transparency – and non-custodial offerings – this is the holy grail for our platform.”
Alluo is not looking at lending, yet. As Tuyaerts points out it’s not the lending but the risk assessment of the borrower that poses the bottleneck.
“In Web3 now, the main lending platforms are over collateralised which means you need to have assets in order to borrow money. I’m not sure that Web3 can offer a solution to this as yet.
Early teething problems in onramp payment systems initially slowed down the Alluo rollout. Alluo had partnered with payment gateways that converted the fiat into crypto but the experience had not been satisfactory as was reflected in the customer ratings and questions.
“In forums people were asking about the payment gateways, on the quotes to buy crypto and issues like slippage. We want the average Joe Soap to use this app and this was not helping. We’ve since partnered with Unblock which is offering free onramps in 35 countries – we think this is a game changer.”
With this new partnership in place, Tuyaerts and his team are confident to go back to market. They are attending ETH San Francisco and have hit the restart button on customer acquisition.
“Watch this space,” he says.
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