How Request Enabling Blockchain-based Invoices?
Christophe told us Request’ backstory and shared his thoughts on the future of DeFi markets.
Hello! What’s your background, and what are you working on?
My name is Christophe Lassuyt, the co-founder and CFO at Request. Coming from the world of Corporate finance, I have been a CFO of international companies in Switzerland and China. In this position, I’ve dealt with the complexity of global financial flows while managing daily activities such as invoicing, payments, and taxes. For this interview, I’m representing the Request ecosystem, which is composed of the team members and the community building the core technology and dApps, REQ holders, and a few early users.
Originally I got introduced to crypto when I first heard about Bitcoin in 2011 from Etienne Tatur, who is the other co-founder at Request. Bitcoin inspired freedom and transparency to us, allowing us to exchange money without depending on the banking system. Avoiding surveillance due to the pseudonymous nature of the network seemed fabulous. Then I dived deeper and got enthusiastic about the Ethereum project, especially because of smart contracts and DAOs. Being able to automate logic and guarantee it by code was promising. This is key to a fair financial system. We can build a finance system that just makes sense.
At Request, we believe in a unique source of truth for all invoices in the future. An open one, bringing interoperability, efficiency, and above all, trust to finance and commerce. The network containing those invoices is designed to remain there for centuries.
Over the last few years, the invoicing world initiated a shift towards E-invoicing, a first step into invoice digitization. Request represents the next step in invoice digitization in a way that its technology makes invoices smart and connected: the future of invoicing. When mentioning invoices, we mean any request for payment, including, for example, loans, grants, or payslips. Request is the first technology enabling blockchain-based invoices and connecting them to payment networks.
A few crypto companies already use our demo product. They use this demo to issue, send and pay invoices, bounties, salaries, and loans. The protocol we are developing allows builders, startups, and entrepreneurs to design innovative products & services to the end-user. A great example of such a startup is Gilded, who has built an invoicing and accounting tool dedicated to digital assets, using Request.
What’s Request backstory?
We started to build on top of blockchain in 2014. At that time, our project was different compared to what Request is today. Our original project was about helping people transfer funds abroad. We provided transparency through a comparison and built our own blockchain-based system. Using bitcoin was revolutionary. It had the power to push back established rules, especially the ones which were not making sense, such as blocked bank transfers from China to Europe, for expats leaving the country.
Over the years, we followed the launch of Ethereum. It is a key project to power a decentralized economy. We went through 3 accelerators with our previous startup: ING innovation studio in the Netherlands, Lisbon Challenge in Portugal, and finally, the YCombinator. That’s when we fine-tuned our project core value proposition, which became Request with its core technology developed on top of Ethereum.
Request engineering team at DevCon in Osaka, Japan.
The original idea comes from our past experiences as expatriates and digital nomads. We had hundreds of discussions with users while working in the money transfer industry and got in touch with CPAs from different countries. When we released our yellow paper, it generated enthusiasm from auditors such as PwC. We also validated the idea by observing the intergovernmental organizations’ interest. In October 2017, we generated REQ utility tokens, and 11’467 people contributed to a 100’000 ETH fundraiser in a period of 3 days. The top 5 nationalities of contributors were China, South Korea, Russia, France, and Canada. At the time, we made sure the contribution sizes remained as fair as possible by putting a max contribution of 6.7 ETH on the first day.
For a project like Request to become successful, we need our team and builders to develop a state of the art technology. This comes through being experts in blockchain and especially Ethereum. We also need to know the market we address and make sure they know us in return. We do this by capitalizing on experiences in invoicing, e-invoicing, and supply chain finance. In parallel, we are developing a network of public and private organizations, including financial institutions and governments.
Finally, an organization like Request would not be successful without its community. Our communities on platforms like Reddit and Discord are watching the market and bring learnings to the team. Most of them are smart and experienced. They contribute with information, contacts, and ideas. It’s as useful as an intelligence agency for us.
The main motivations building Request are the frictions and inefficiencies of the current financial system. For Individuals dealing with the financial system, there is so much which does not make sense at the moment, especially when we are aware of what is technologically possible. We realize that the current financial system has its limits. As an example, most banking apps do not interoperate with each other at the detriment of individuals. That’s why it’s often painful to transfer to or request money from someone using a different bank. Yet, it’s a fact that blockchain would reduce friction and can bring the interoperability between banking apps. Users would profit from that.
For professionals, an illustration of the inefficiencies in the current economic system is that two-thirds of SMBs get their application for invoice factoring or financing rejected by banks because of lack of trust. Blockchain can help to increase trust by guaranteeing the uniqueness of invoices, thus leading to a better service for SMBs.
In the end, we can’t be waiting for others to build the ideas we have in mind when it is about people empowerment. We want to create something that makes sense at a global level for both individuals and professionals.
What went into building Request?
Request started to be visible at the time of the fundraising in October 2017. We have an ambitious roadmap and released the first version of the Mainnet in March 2018. Because we wanted to have a fully scalable system, we quickly designed a second version and released it in August 2019. Thus, we currently have two concurrent protocols running in parallel. The first version is now used by multiple users, with close to 1’000 requests paid on the network. The second version is promising, with encryption, independency, and scalability. Encryption and scalability will be implemented in the coming months.
Since we started working on Request, the DeFi ecosystem went from small and tech-oriented to a very diversified holistic landscape. Many talents from many industries have joined the adventure since, with different views, giving more chances of success to the whole ecosystem. The DeFi applications are getting stronger and start to have product-market-fit. It’s a good reason to be enthusiastic.
At Request we are building a protocol that combines the powers of Ethereum and IPFS. To us, solving the tech limitations existing today are a matter of time. We are confident in the ability of the teams to solve the challenges of scalability and privacy within a few years. In the meantime, we’re building ways to compensate ourselves.
Request is a platform, a financial infrastructure for innovation. Choices we make today have big consequences for future possibilities. We put decentralization first, even if it takes some time to do well. We care for our users’ security and privacy. That’s why we perform regular audits, and we do two audits for each smart contract change.
In parallel, we want to learn fast and reach a first large-scale product-market fit. The crypto companies understand the value of Request for connecting invoicing and payments. They believe in transparency and trust the technology. They are still a niche. We need to learn more from the traditional corporate finance to adapt the trust brought by the blockchain to their needs.
What’s your business model?
The Request Foundation is a non-profit. Yet there is a burn mechanism for the REQ token. Every time a user creates (a batch of) requests, a minor fee of max. 10 cents is sent to the burner (smart) contract. When a function is called on this contract, these fees are used to burn an equivalent amount of REQ tokens, lowering the total supply. The goal is to incentivize adoption while avoiding malicious use of the network.
Because we worked on Request V2 so quickly after the first release, we never had a chance to actually advertise for the V1. Yet, it got some usage. That’s good news for us. Most users come back monthly, especially if they need an easy way to get their salaries or invoices paid in DAI. Or they might look for financial transparency and simplicity when dealing with crypto payments.
The product is attractive. The fact that an imperfect tech has got usage shows that there is potential. Our V2 is bringing features such as encryption and scalability, and it will be an opportunity for growth.
The invoicing market is, of course, very competitive, with different approaches. Ours is about cooperation. We favor interoperability, open-source, and decentralization. For example, we can either build a factoring service ourselves or onboard the specialized partners instead. Request cannot succeed without focus, which comes with good partnerships. But if we believe we can complete this expertise ourselves, we will.
Request’s target markets are mostly invoicing and bookkeeping. But we also focus on factoring, taxes, business intelligence, and e-invoicing. Actors interested in our technology range from governments to companies and individuals. Virtually anyone involved with payment requests.
What’s your position on the regulatory landscape today?
From our point of view, regulation is necessary for a healthy technological transition. Regulators are preventing a broader usage of cryptocurrencies. One of the reasons is to protect people from scams. Each geopolitical region has its own way of protecting its economy. It makes sense as long as it leads to something healthy.
In a few years, regulation might do the reverse by promoting the use of blockchain applications. It has the potential to reduce fraud and increase transparency. That’s one of the futures we envision.
What are your goals for the future?
As a team, we are eager to learn, adapt, and contribute to changing the space: we work hard for the paradigm shift from centralized to decentralized-first to happen.
From a technological point of view, we are willing to confirm product-market-fit. We are already observing signals of traction with our demo Request a Payment app, even though this is an MVP. With the implementation of V2 of the Request protocol, we increase the possibilities to gain more product traction with our own products, while simultaneously giving more flexibility for community developers to create new products and services facilitated by the network.
With encryption moving towards a usable state on v2 of the network, it unlocks a wide range of new possibilities for existing invoicing, accounting, and ERP professionals who now benefit from blockchain openness as a data-sharing technology while keeping their business confidentiality and privacy: the potential is tremendous. We’re enthusiastic.
What are your future thoughts for the DeFi market?
Globally, the public image of cryptocurrencies lacks trust and visibility right now. Some people associate it with dictatorships, hacking, and other illegal activities. The perception of a majority of people is that way. Banks have been quite efficient up till now to prevent the crypto world from becoming mainstream with hard to cross bridges between centralized and decentralized economies. And the blockchain technology ecosystem is not ready to overcome these challenges, yet.
To us, most of the cryptocurrency applications are healthy, fair, and good. DeFi can power a fair economy. This is a movement that goes towards financial inclusion, data protection, and people empowerment. The future looks bright.
There are first product-market fits in DeFi. Decentralized loans are promising. Decentralized investments too. We need a seamless experience, a conscious change and scalability to make those dapps mainstream. DeFi is about people building a system that makes sense, and promoting each other. We’re in the same boat.
The same way companies digitize themselves, and they will “blockchainize” themselves. Most could struggle to bring the advantages of blockchain because they fear decentralization. The spirit is so different. The competition is at the heart of their systems, while cooperation is key in the decentralized ecosystem. Instead, we see new global actors emerge because they are decentralized by nature. Ethereum is a powerful actor already. One of its critical assets is its decentralized workforce.