Keynote: Regulated DeFi Laboratorium

[Music] good morning everyone and welcome to the third day of european vlogs and convention 2021 we're so excited to be here with you today we have an amazing keynote from blone she was speaking earlier this week already in a panel and she's now going to present what's going on at the at her project concordium lonnie welcome on stage glad to have you on board thank you so much i want to tell you a little bit about concordium which is one of the newest blockchain um with our ccd uh cryptocurrency and we came on the mainnet this summer and have a lot of activity already at our chain we have just launched um the decentralized fintech lab regulated decentralized fintech lab initiative as a part of our community endowment program and we have allocated 100 million euros of tokens in order to intensify and test and try new decentralized fintech products which then will be regulatory compliant so we're super excited to invite people on board this initiative when our founder la saya who is also the founder of saxobank actually project number 100 on the internet back in the 90s he had a lunch at this point in time christmas lunch with charles from kedano in 2017 and heard about kidana but when he listened to it and with his background and our background most of us in concordia do come with a heavy financial background we understood this was not sufficient just to put a blockchain up which had a lot of issues um in order for financial institution or even large corporations um to use a blockchain what we think are the issues is first of all that you don't have identity that you can work anonymous on on the blockchain as much as uh four to five percent of the world gdp is is is actually say um if you put a price tag on what lack of trust between people actually could build of growth in the world number one for us was to create trust you have to know who you are transacting with and therefore we have identity at the protocol level so anybody using our blockchain will have their identity validated and you have then you i your identity will be say printed in an encrypted way on all transactions that also gives regulators a possibility if they have a code order if if they have legitimate access to to to have the information what has been transacted at what point in time exactly as when you are transacting in a bank it might sound very boring and and um when we first launched this idea some years back um we we had a lot of say opposition now i think everybody understands regulation is coming into the blockchain and crypto space exactly as it is in the world outside it's totally parallel and this is why we did it we did see that coming so with the new legislation in in europe if i just speak from from europe um there are the new aml demands and the new mica demands coming in and you cannot do anonymous payment transactions for the future our blockchain is very well suited to build any of your regulated decentralized fintech cases on concordium so that will ease the compliance also the next thing we saw this if you don't have finalization immediate finalization i'm being a little bit technical to say you can't live with probabilistic finalization where you will have um rollback and have a likelihood of rollback but if you have deterministic finalization as we do in our protocol then you know immediately in split seconds that your transaction is is final this is what you need if you are building um most use cases um this is why we use blockchain we want it to be immutable and we want to know that we have transacted and and that's final um the other thing um we found when we were and i and making an analysis of of blockchain was that um in the financial world anything is going towards zero in transaction costs so for us it was not likely that you could have large-scale adoption of blockchain if you don't have a stable and very low transaction cost and this is why the transaction cost on concordium is going towards zero it is stable in euro terms and then denominated in our payment token the ccd then it is possible to to uh to budget what you're doing and and have a transparent knowledge of what your use case will will cost i i think this is elephant and omega 2 to have so these are some of the features we were building in but also when i look at the heavy software demand and i'm also the vice chairman of volvo cars i sit at the board of ikea and i sit at the board of other norwegian companies who are building platforms in in the north sea building also under other regulations you need to make sure that the software you're using is is stable that it's doing what it should do and our protocols are built from science protocols made by corpora concoction blockchain research center at oahu's university and at eth in in switzerland and the protocols we have our own science team within um doing from the peer-reviewed protocols so peer-reviewed um in the best conferences for for the various areas be it uh cryptographic or in terms of governance etc to economics and then we uh write the blue paper and we code from that and then we have a third party um outside-in review of it so what we say in our white paper and what we code and how it's working is totally consistent remember that most of the blockchain even blockchain you see today started as a very interesting super interesting hobby project but they were never meant for industrial grade or enterprise grade or financial institution great if you like and this is our ambition we have made this um mature blockchain which then is suited for um large-scale adoption so the latest initiative and i'll move a little bit so you can see it here behind me but that is our concoction uh decentralized um fintech lab and um we we are really interesting in in seeing all kind of use cases coming into that it is in syria we can assist in um finding the best legal advices and and the auditing advice and how it's going to build into the software's suite and we're looking and have capabilities also in our corpus and at august university to look at formal verification of of smart contract for example so we are very excited to um to get going and see the first taxes also built on concoction tokenization projects where you can use the elements of the id for example one a very interesting thing that you could lift from our id object the information you would like to to to have up with zero knowledge proof and and use it in in various ways and also build it in probably to your aml or if you um have to do um and and perform as as a vesp etc so this is in in short um what we're bringing to the table and um it we also want to have fun so i also want to mention we have just launched a nft platform on concoction where also it nfts are getting both very expensive but also getting something you you want to make sure that you have the original um you want to have the provenance you want to prove that this is yours and and yeah there our id also comes very handy in that you can actually um built that whole provenance site and make sure that you can prove um who was the owner who is the owner and what is your identity of of that nft so um with this i i will open for questions um to our blockchain or from the audience if you want to um discuss some of the elements i don't know daniel if you want to um right to open the table hello yeah happy to direct you some of the questions from the audience one question is if the people want to know what sort of projects have already applied to the lab if any have applied and what type of projects are you expecting to receive is it more d5 projects or nfc projects and if it's dfi or nfd what kind of projects or what kind of solutions is it more retail focused or enterprise focus so if you can talk a little bit more about this yeah so um the first projects are artlex texas which which i think is is very fitted for our a defy um lab um so with their liquidity pools and um in that connection we also now discussing to build um stable coin because that's another area you have the usdt and usdc but we might also consider to uh to host um a stablecoin project to um to support another thing we're looking at in in the lab is um for for um structured products to tokenize uh structured products which is also super interesting um what it could be it can be any structured product and and then you can put some say um various um probably um either heads against interest or fx elements into these products so this is what what people right now are very interested in in building got it another question from one attendee is do you think d5 is cutting less attention because of the mirrors um i think it's two completely different things um i think there's uh we had dnft and meteverse yes but i i see a lot of financial institution being very interested in the d5 and i think it's i was comparing this when i spoke on monday now we are speaking here at zoom if it was years back we would be speaking probably on the phone but it's still the same providers of the infrastructure before we paid for a call and now we pay for the for for the infrastructure we don't pay for this call and i think this is also what is going uh to happen on the d5 so it would be different um financial institutions moving in now and understanding how they can use these products and leaning in with their capacity and that is again to take care of people's money we trust um at least the banks maybe maybe we'll we will lose on the products but um we trust that the money we put in the banks are there and they don't just disappear i think that is one of the elements where the established institutions even on a decentralized do have also something to bring to the market and the ongoing discussion is who is it is it most easy for a bank who have the total compliance in place which you might now need to have also as as a digitalized provider or obliged person as you would call it in the aml terms is it easier for a bank to apply blockchain and and decentralization or is it easier for and a newcomer to provide the whole aml and and mika um regime and it it sounds tempting that you are lean when you come with a total fresh mindset but i have tried both i've both been in a very established environment in credit space and helen's bank i have also made fintech and now we're doing blockchain and we do the regulated decentralized finance and i tend to think it might be easier um if if you really dare for the established also to come in now where you need to apply regulation so i think there'll be a battle for for a couple of years i think also um the established financial institutions will learn a lot from what is going on in the market in in particular in terms of usability um that it's it's very intuitive and and and easy and interesting elements but then there will be a lot of discussions on what can you actually do and how do you pre protect the consumer that's at the end of the day what the regulator is after and um the high margins you can earn now naturally comes with a victim whenever you can do like 20 x overnight or 50 x's loose in the other end and and that won't last we saw that coming into the fx market which was like maybe as the d5 market is today the fx market was in uh the 90s and and beginning of of 2000 up to maybe 2010 but today uh it is not like this anymore so i think it's it's a moment where where things are are boiling force and back very interesting yeah understood another question is not it's more focused on concordium in itself the question is how does that work exactly with the id link to to the protocol layer but still maintaining its privacy how is that possible yeah how does it work yeah so i'll just give a couple of headlines and uh please read our medium post we have a very good explanation of it also in our white paper um lean out if you want to know more but um you are identified and we we have a couple of identify identification providers you download our app and then you identify yourself with your passport or any um of the id cards we accept that is very easy to see in the app and then you get your identity object and from that you can open your um account your first account initial account and then for security reasons you can open subsequent accounts and then when you use it it's all encrypted so your identity is off chain so we fulfill the dpdr rules as well so your identity is not visible on chain it's only an encrypted version of it and then all transactions would come with that idea and in your wallet you can call on on certain elements of it and use zero knowledge proof so for example if you want to to prove um a certain age or certain nationality etc so that is in essence what it is but it's very important to to to rest assure that your privacy is is protected and this is why we say it's um privacy with accountability so no um anonymous transactions but privacy but with accountability and when we say accountability is that that you allow um if regulators need to see what has been going on that can be re relieved with an identity revoked but only with a cold order so it works exactly as if the regulator is coming into a bank and want to see what transactions have been performed on a certain account okay i think benny also helped us out here he just shared the link to the medium you just mentioned so people can find the the article and medium in the chat another question we have here how is it different from existing glt solutions such as cosmos polka dot tesos okay so they are all very different but what we have is that we have finalization immediate finalization so the it's a two layer consensus with consensus and then finalization and the only i can think of right now is algorithm to have finalization at the protocol level but they don't have the id so that's very different from the existing blockchain it's also ours is proof of stake naturally and we also make a a big um survey around constantly where to run our own note so we are hunting a green uh energy in order to make it as as green as possible and we actually just moved a couple of our notes in order to um to be sure that that we constantly have a green blockchain and that's another thing now i'm taking my fortune 500 hat on again but from this year in europe you're going to sign the esg accounting if you are a bigger company or a listed company and in all companies now you you have to have an est regime in place what i see the trend is in most companies are that these becomes exactly as you have your controls for your financial numbers you would have control for your est so all decisions everything you do have then to be into the est reporting many are getting esg rating but there will be also a couple of years now where you will see basically everything you think about you do in a company have to go in it's not only about um co2 but it's about um the whole way you are conducting and and you take your strategic decisions and this is why absolutely it would make no sense for example take volvo and and the dealer group is also one of our investors we are using the blockchain now to build and support autonomous drive building on on blockchain for certain of the parameters will very soon come out with some explanation of uh this is a super interesting use case but take that um when we have ev cars in pole stand and volvo if we were running blockchain of proof of work using so much electricity to prove um certain things around for example where you do the the harvesting or if you do urban mining for cobalt for your batteries it would make absolutely no sense to run it on proof of work and then spend so much electricity remember bitcoin is right now using something like 0.5 percent of the world's electricity and then you would use that to prove that you are sustainable it it's just a contradiction in in terms so these these are the things we we also want to make people aware of because there's a lot of say um still a lot of education for us all um to to still have before the whole thing is is mature so we hope we can have these dialogues also with um the industry blockchain for driver driverless cars so this is getting even more fun yeah i have another question from sagar he is asking what's the role of decentralized oracle networks in d5 he wants to know your opinion on decentralized oracle networks yeah so it depends uh how you want to uh to use it i think one thing on decentralized and when you do the whole element of decentralization we were listening to the panel on monday and their opinions about say trust that if you decentralized everything you you you're not suffering safe from lack of trust between people i think that that whole area still needs a lot of research because at the end of the day it is a technology it is coding so that's the elements so you cannot just put it to work without again being behind and and making sure that things are are working so i think on the whole element of decentralization which is also important in order to create a decentralized decks and and don't have the um don't become a vast for example but still what kind of money how can you test it how can you verify um two things that your things are working and that they are working as intended so that the contract is actually code coded the way it it should work but also that um the whole thing is is sufficient solid there are no back doors it's etc so i think that whole element still needs really to be um developed understood uh we have less than 30 seconds left lonnie i wanted to ask the last message from the concordium d5 up what's the message you want to leave for the audience yeah please join us go to our website and join us on on the d5 lab we want to to work and understand how we can apply regulation and still stay decentralized because uh so much um cool to build and and support so please join us thank you very much for the audience to know lonnie and her team have also a virtual booth in our exhibition area and they will be happy also to attend more questions thank you lorne once again thank you very much and see you in the next session we will have a nice day bye [Music]