Blue Whale

[sidelaw]

Project Abstract

Blue Whale is an AI-powered chatbot that enables over 4 billion WhatsApp users to send, receive, and manage Polkadot-based assets as easily as sending a text. By integrating a smart wallet into the world's most popular messaging app, we make crypto adoption simple, intuitive, and accessible to everyone. Developers can also leverage our open tools to build chat-based crypto applications, expanding the ecosystem and driving global adoption of blockchain technology.

Grant level

• Level 1: Up to $10,000, 2 approvals
• Level 2: Up to $30,000, 3 approvals
• Level 3: Unlimited, 5 approvals (for >$100k: Web3 Foundation Council approval)

Application Checklist

• The application template has been copied and aptly renamed (project_name.md).
• I have read the application guidelines.
• Payment details have been provided (Polkadot AssetHub (USDC & DOT) address in the application and bank details via email, if applicable).
• I understand that an agreed upon percentage of each milestone will be paid in vested DOT, to the Polkadot address listed in the application.
• I am aware that, in order to receive a grant, I (and the entity I represent) have to successfully complete a KYC/KYB check.
• The software delivered for this grant will be released under an open-source license specified in the application.
• The initial PR contains only one commit (squash and force-push if needed).
• The grant will only be announced once the first milestone has been accepted (see the announcement guidelines).
• I prefer the discussion of this application to take place in a private Element/Matrix channel. My username is: @_______:matrix.org (change the homeserver if you use a different one)

[github-actions]

CLA Assistant Lite bot All contributors have signed the CLA ✍️ ✅

[sidelaw]

I have read and hereby sign the Contributor License Agreement.

[diogo-w3f]

@sidelaw Thanks for the grant application. While I find the project interesting, the application lacks several important details and technical information. Below is a list of what I noticed:

• Project details: Please include an explicit bullet point for “What the project will not cover,” along with links or references to UI mockups, API specifications, or existing documentation.
• Ecosystem fit: This section should cite concrete evidence supporting the stated needs (e.g., forum threads, data, or articles) and include comparisons with related ecosystems, not just Polkadot.
• Team: The section is missing key information such as a contact email, website, registered address, legal entity, GitHub usernames for each member, and any available LinkedIn profiles.
• Development status: Please provide links to prior research, an MVP repository, videos, or other proof of work.
• Referral program and “Additional Information / How did you hear about the Grants Program?” These headings are missing; include them and write “N/A” if there’s nothing to report.

Could you also review our guidelines and explain how your project could help improve the usage of the DOT token?

[semuelle]

Pinging @sidelaw.

[semuelle]

To add to what Diogo already mentioned: can you expand on this bit? How do you implement transaction fees? Have you done any market analysis for this? Potential size of the user base and market?

[sidelaw]

@diogo-w3f @semuelle Thank you for the feedback. We are taking the time to revise the proposal and will update it by tomorrow, as well as provide answers to the questions.

[sidelaw]

@diogo-w3f Should be fixed now. Please let me know if there is anything else. Thank you.
@semuelle Thanks for the questions

1 How do you implement transaction fees?

Transaction Fees Implementation

Fee Model: We plan to implement a small, transparent transaction fee of 0.30% on every transaction processed. Using smart contracts to handle fee deduction automatically during transaction execution. We will ensure that the user sees the net amount post-fee, maintaining a seamless experience.

This fee is considerably lower than fintech like Wise and Revolut at an average of 0.92% and significantly lower than traditional payment processors (like PayPal at 2-4% + a fixed fee) and competitive with crypto alternatives.

2## Market Analysis

WhatsApp has over 2 billion active monthly users globally, including regions with high interest in crypto adoption (India, Latin America, Africa).

Primary Market - Daily Users

Target Users: Non-technical users seeking easy access to crypto, for daily sending and receiving services.

• India: 487 million WhatsApp users
• Brazil: 147 million WhatsApp users
• Indonesia: 119 million WhatsApp users
• Nigeria: 90 million WhatsApp users

Addressable market: A conservative estimate of 0.5–1% penetration of WhatsApp users for Polkadot transactions would equate to 10–20 million active users.

Secondary Market - Merchants

Global small-to-medium merchants using WhatsApp Business: 50+ million businesses

Target merchants in emerging markets seeking lower payment processing costs

Addressable market: Conservative estimate of 0.5% adoption = 250,000 merchant users

Tertiary Market

Developer Fees / SDK Access: Premium SDK features and analytics dashboards for developers creating WhatsApp mini apps. Collaborations with payment platforms, NFT projects, and DeFi protocols for embedded services.

[diogo-w3f]

@sidelaw Thanks for the answer. What about regulation? Have you already researched how it works in the countries you mentioned? I live in Brazil, so I can tell you that everybody uses WhatsApp here. Besides that, launching a financial product on it can be a major challenge. Meta took years to be approved by the Central Bank of Brazil to launch its payment system, and even so, people mostly use PIX, which is a system provided by the Central Bank where nobody pays fees for payments and bank transfers inside the country.

Furthermore, the Central Bank is tightening the conditions to open fintechs in Brazil, since criminal organizations were using the financial system for money laundering. In this way, you should expect to need some millions of Reais available to open a fintech in Brazil. So how do you plan to handle that?

What about the users? How do you plan to convince them to use your system when they already have one that works for free? Do you know the crypto regulation in each of these countries, and how are you going to handle it?

[sidelaw]

@diogo-w3f Thank you for the thoughtful questions. It makes sense that you have a strong understanding of WhatsApp’s potential, especially given your base in one of our key target regions. While Brazil is only one of the 180 countries in which WhatsApp operates and all of which we intend to serve as we scale, it is strategically vital to our pilot due to its regulatory, economic, and user-behavior advantages.

Here is a breakdown of our approach:

---

1. Regulatory Strategy: Partnership-First, Not Go-It-Alone

Current Status (2025):
Crypto is legal and regulated under the Investments and Securities Act 2025. Companies must comply with AML/CFT, KYC, and consumer protection regulations.

Our phased approach:

Phase 1 (Months 1-12): Partner Model

• Partner with already-licensed Brazilian crypto exchanges (e.g., Busha, Quidax).
• Function as a wallet interface layer, not a direct VASP.
• Leverage partner licenses to ensure regulatory coverage during the pilot.

Phase 2 (Year 2) — Build Toward Independent Licensing

• Submit VASP applications with proven user demand
• Work with Brazilian legal counsel specializing in crypto regulation.
• Continue operations under partner coverage during approval
• Establish long-term compliance infrastructure so we can scale reliably.

Phase 3 (Year 3+): Independent Operations

• Obtain independent licenses in key markets
• Full operational control and scaling

Other strategically important markets:

• India: Crypto legal to trade as VDAs; large remittance flows.
• Nigeria: 32% crypto adoption; $20B+ remittance corridor.
• Indonesia: 21M crypto investors—more than stock investors.

These markets together offer both volume and early Web3 readiness.

---

2. Why Choose Us Over PIX? We're NOT Competing — Our Complementary Role

PIX is exceptional—170M+ users, free for individuals, near-instant.

What PIX Does Brilliantly (We Won't Touch)
✅ Domestic Brazilian payments
✅ Free/low-cost local transfers
✅ Instant settlement in BRL

We agree: PIX is unbeatable for domestic use. We're not targeting that market.

What PIX cannot do (and where Blue Whale fits):

A. Cross-Border Payments

• PIX is domestic-only.
• Blue Whale enables transfers across Polkadot ecosystems globally (e.g., Brazil ↔ Nigeria ↔ India ↔ Indonesia).
• Key use case: diaspora remittances and freelancer payments.

B. Cryptocurrency Support

• PIX handles only BRL.
• Blue Whale allows DOT custody, transfers, and eventually DeFi access—directly inside WhatsApp.
• Crypto adoption in Brazil reached $318.8B in transaction value in 2024.

C. Blockchain Integration

• PIX cannot connect users to decentralized applications.
• Blue Whale enables access to Polkadot parachains, DeFi, NFTs, and governance—without forcing users into unfamiliar apps.

---

Market Positioning

Use Case	Best Solution	Blue Whale?
Coffee in São Paulo	PIX	❌ Not us
Portugal → Brazil remittance	Western Union (8–15% fees)	✅ Us (0.30%)
International freelance payment	PayPal (4% fees)	✅ Us (0.30%)
Hold crypto easily	Exchange app (complex)	✅ Us (WhatsApp)

Positioning:
We complement PIX by enabling international, crypto-native, and Web3 use cases.

---

3. User Acquisition: Why Users Choose Us

We’re not targeting typical domestic PIX users. We target cross-border and crypto-curious users with clear pain points:

Example Personas

Maria (Brazilian living in Portugal):

• Sends money home monthly.
• Current: Western Union (high rates), bank transfers (3–5 days).
• Blue Whale: Send DOT instantly; family converts to BRL locally.
• Value: Faster and cheaper remittances.

Rahul (Indian freelance developer):

• Paid by global clients.
• Current: PayPal (4% fee + bad FX), exchanges (complex).
• Blue Whale: Receive DOT in WhatsApp, hold or convert.
• Value: Familiar interface + better fees.

Chukwu (Nigerian small business owner):

• Receives frequent remittances.
• Current: MoneyGram (high fees), local exchange routes (friction).
• Blue Whale: Receive DOT directly.
• Value: Simpler, cheaper remittance flow.

Market Opportunity

Annual remittances:
Brazil: $7.3B, India: $125B+, Nigeria: $20B, Indonesia: $10B

Traditional fees: 6–10%
Blue Whale fees: ~0.30% → up to 95% reduction.

Capturing even 0.1% of these corridors = hundreds of millions in annual transaction volume.

---

4. Regulatory Approval Path — Lessons from Meta’s Experience

What happened with Meta’s WhatsApp Pay:

• 2020: Launch blocked immediately.
• Took 1 year for P2P approval; 3+ years for business payments.

Reasons for pushback:

• Threatened banks; operated like a payment processor.
• Closed ecosystem.
• Seen as competition to PIX.
• Data/privacy concerns.

---

How Blue Whale’s approach differs:

Partnership-First, Not Competitive

• We don’t process payments; we integrate with licensed exchanges.
• We’re a UI/UX layer, not a financial competitor.

Open and Multi-Partner Model

• Work with multiple local VASPs from day one.
• Encourages competition; reduces regulatory friction.

Positioned for New Use Cases

• Focus on cross-border and crypto/Web3, not domestic payments.
• Not a PIX replacement; a complementary service.

Proactive Regulatory Engagement

• Transparent compliance documentation.
• Early relationship-building with regulators.
• Legal counsel in-country.

---

Realistic Brazil Timeline

Year 1: Operate under partner licenses, Pilot with small user base, Establish compliance track record

Year 2: :Submitthe VASP application. Continue operating under partner coverage

Year 3+:: Receive VASP license, Scale independently with regulator support

It's also important to note that for most other countries without Brazil's PIX system, local day-to-day transactions will be our priority. The above response addresses how we'll solve a specific problem in this particular context, while still maintaining access to the over 2.7 billion potential users across the 180+ countries that WhatsApp enables