Interstellar Merges Into Velo Labs

On March 15, 2021 Velo Labs and Interstellar announced the two organizations would be merging their talents, resources, and assets to improve upon the existing global settlements network.

The two companies partnered in 2020 and appear to have sealed the deal officially in January 2021 - with the announcement made public on March 15, 2021. Mike Kennedy, CEO of Interstellar will be joining Velo Labs as the new CEO along with various team members.

Interstellar & Velo Labs Interstellar was founded by Jed McCaleb, co-founder of Ripple and Stellar and is essentially the commercialization arm of the Stellar Development Foundation, aiming to create products and solutions to the $2 trillion dollar international payments industry. Jed McCaleb has been an advisor to Velo Labs since its inception. The Interstellar website states that their mission is to “revolutionize the $2 trillion international payments industry, with a current focus on delivering faster, cheaper and more reliable cross-border payments”. Their mission aligns closely with Velo Labs’ own to significantly improve upon the current cross-border settlements industry.

With the resources of the two combined, the potential is there for Velo Labs to be making strong headway in the cryptocurrencies and settlements sectors.

Velo Labs, a relatively new company which Block Journal interviewed and featured in February 2021, listed on its first exchange KuCoin in September 2020. In the past six months alone they’ve made significant strides by partnering with companies such as Terra, Kyber Network, Chainlink, MaiCoin, Asia Digital Bank, Visa Worldwide, and more. The token has also since listed on VCC Exchange, OKEx, and MXC.

A snapshot of some of Velo Labs' partners.

Adoption Potential Velo Labs already has a strong network of partners in traditional finance and cryptocurrencies. By combining Interstellar's resources, it's likely that the Federated Credit Exchange network will see a significant uptick in transaction volume. The FCX completed its first live transaction between Lightnet Group and SEBA Bank in December 2020 - with their eyes set on tackling the $2 trillion international payments market is the main objective. Analysts often observe transaction volume as an indicator of a chain or company's success. By connecting multiple large financial institutions through Velo Labs' FCX, reserves of VELO tokens in the FCX system should see a steady increase too. Since the first transaction on the FCX, transaction volume has been steadily rising as more and more of Velo Labs' Trusted Partners integrate with the Velo Protocol (including those brought over from Interstellar). The token distribution (below) of VELO was designed to have worldwide settlement potential in place. With only 40 million tokens in circulating supply on market, and the remainder locked or to be used by Trusted Partners in the Digital Reserve System of the FCX - surely enough to accommodate for the $2 trillion settlements market.

VELO Token Supply Distribution (from 3-Pager)

What is the Federated Credit Exchange (FCX)? (From Velo Labs) The FCX is a unique distributed network with regulated entry points that connects an array of traditional, centralized and decentralized finance partners. Standing firmly in the Federated Finance category, the FCX combines the efficiencies and freedom of DeFi with the well-worn, mature practices and standards of CeFi and legacy systems. It is this approach that makes it possible for the FCX to enable the liquid exchange of digital credits pegged to any fiat currency while guaranteeing last mile settlement using the VELO token.

Before participating in Velo Labs’ FCX, all network participants must agree to a set of core conceits. Namely:

  • VELO tokens serve as the FCX’s universal collateral;

  • VELO token transactions are confirmed using a Federated Byzantine Agreement — the Stellar Consensus Protocol;

  • The FCX’s core function — issuing and transacting with digital credits pegged to any fiat currency — is built on the Velo Protocol.

Opinions and Reaction Influencers and journalists have scrambled to digest the partnership between Interstellar and Velo Labs. It was reported by The Block Crypto that this deal was in the 9-figures. There have been rumors that Velo Labs acquired a significant amount of Stellar Lumens (XLM) in this transaction. The current price of VELO at time of writing is $1.22. Cryptocurrency analysts have started to speculate on the amount of XLM Velo Labs could possibly own. The XLM market cap currently sits at $9 billion US dollars. Communities and enthusiasts in the Velo Labs Unofficial Trading Telegram chat are already excited and comparing XLM’s market cap to VELO’s market cap of only $50 million. Speculation is mounting on the potential margin for growth - considering it’s likely (if the 9-figure reports are accurate) that Velo Labs may own a significant amount of XLM tokens. From more conservative estimates, it’s possible Velo Labs currently owns up to $1 billion worth of XLM tokens. Speculators are comparing the two market caps and the conclusion in communities seems to be that the margin of growth from $50 million to $1 billion market cap is all well within reason.

Jed McCaleb on Partnership Jed McCaleb, founder of Interstellar and Stellar commented on the joining of forces between Velo Labs and Interstellar, “This is a significant step for the Stellar ecosystem, with potential to drive more anchors to the network, creating new on/off ramps in Asia and business opportunities for both Velo and Stellar communities. It ultimately moves us closer to the future we want to see, where Stellar is connecting global financial infrastructure so that it’s faster, more affordable, and more accessible.”

Jed McCaleb speaking on a panel hosted by ChainDD on the partnership between Interstellar and Velo Labs. McCaleb immediately appeared on a panel hosted by ChainDD announcing this partnership. Amongst the panel speakers was Chatchaval Jiaravanon (Chairman), Tridbodi Arunanondchai (Vice Chairman), Mike Kennedy (New Velo Labs CEO), and Jed McCaleb (Co-founder Ripple & Stellar) himself.

Conclusion This partnership is certainly one to keep an eye on. Interstellar's merging into Velo Labs appears to be a match made in heaven. With the already active Velo Labs' Federated Credit Exchange network and strong connections across Asia - adding on Interstellar's expertise and technological prowess, it's a big leap for international settlements.