[DeFi Panel Discussion] Decentralized finance

[Applause] [Music] so how many have you in this room have heard about decentralized finance great how many people in this room have actually used the defy products such as para or make our Dow or any other service such as compounding etc great we see some hands so yesterday we had this great news that ripple which says SF Bay start up behind XRP just acquire payment platform logos network to really develop the five products and victaulic said that the file is gonna come first so I think that if I is actually the oxygen to this crypto industry lately so I'm very excited to moderate this session I'm Shin hailey partner of gbic which is a crypto fund based in us Korea and China and we also have consulting and marketing arm called blocks any two so I want to welcome all be great panelists for today panel so let's kick off today's conversation by a brief intro so can you please explain what kind of defy services does your company provide and why that product even matter though if you wanna start you know I just spoke so I'll be really okay guys yeah good afternoon my name is Eric you from DXM we are a subsidiary of two number which was set up at the beginning of this year we are engaged in several businesses of which one is defy protocol and service development we recently launched a service called Trinita which uses the Divine Protocol and I'd like to say it's we haven't been pushing it aggressively abroad nor domestically but it is actually the first on chain decentralized Krypto - crypto deposit on borrow service which not only supports eath but BTC and XRP as well we have a few more additional businesses that were engaged in but I'll leave the room for Jocelyn hi everyone I'm Jocelyn and the APEC community lead from Macau so make it out is actually the creator of die which is also the first decentralized stable coin but on aetherium blockchain protocol so and we are not just a stable coin because we are also permissionless and decentralized landing protocol allowing anyone to affix to have control over their own assets and generating loans against the assets that they own so the I was actually launched and between the late 2017 and we have actually come a long way as I think every one of you might have known that you know we are also the leader in the defy space so I'm actually very looking forward to Hugh speak on the panel today yeah hi everyone I'm Bonnie and I'm one of the cofounders of the project Vega Vega is a project to create a completely decentralized protocol for trading of margin derivatives and other products you have one of the other unique features of the protocol is the ability to price liquidity and to incentivize people with strong incentives to create new markets great so we know that this crypto industry follows the trend a lot probably you heard sto at the end of last year a lot you heard like the blockchain gaming a lot the beginning of this year and now we start hearing a lot of D Phi D Phi D Phi D Phi everywhere so do you guys really think that D Phi is just changing anything fundamental in this industry or it's just another buzzword and to not make it a just a simple buzzword what do you think that we need to see from like service provider like you guys I mean I have a lot to say about the fire I think so one thing that I don't I don't have lots to say like I like one thing that is absolutely confusing to me is that in a traditional lending market it's basically a two-sided market between the borrowers and the lenders right but with T Phi you add a complex third party here which is basically appetite for margin trading crypto right because like a lot of T Phi participants like draw comparison with you know taking a loan or like a mortgage on your house for instance but it's like fundamentally different right so with the house there's high friction in order to acquire like new capital like you don't want to move out of your house or so some sense but if you take away like basically capital gains taxes for crypto in the US there's actually no reason to take out CDP's or like loans based on your crypto collateral crypto collateral right so like I actually don't understand how this is sustainable right and like furthermore if you think about it like all the interest rates should convert to the federal funds rate based on how much additional risk that you take but presumably like if your if your position is more than a hundred percent collateralized it's basically a risk-free investment so the idea that you can get a plus interest on something like that is absolutely scamming in my opinion well I think that we can step it a little bit and I think everyone has different definition of defy actually so I think like though when you say defy I think you're looking at to kind of kind of stand our definition of defy where a lot of people think it's just like lending and borrow but even just like the FinTech and defy if you look at it there are just many aspect it can be payment it can be lending it can be Sto it can be issue on platform so but do you do you still preserve your opinion that if I if you think about if I is more broader definition so when I was talking about theif I was just talking about the standard buzzword up yes exactly that's what I figured basically the eight percent interest on over collateralized physician doesn't really make sense to me yeah but what do you think about payment as you do or any other aspects of the FI oh it's absolutely an interesting well I think though just mentioned one sub segment of the whole defy group and one of that is lending obviously and maybe if I could answer to his questions I don't I don't think it's a definite answer but maybe the reason why the so-called interest rates are so high it's because it's pretty a look a liquid at this moment and conversion to maybe fiat money is not that easy as of now and maybe you know if you think of weighted average cost of capital and the risk side maybe that factors in and the numbers right now are currently a little high from your point of view I agree with that but it's still at it's very nascent stage and I'd really like to emphasize the fact that no people have been asking us when will mass adoption come for d5 but I think it's going a little too hat to a head it's kind of rushing ahead because this just started so I think I'd like to answer that by saying the true beauty of defy for example is maybe transparency and it doesn't actually give equal opportunity to every single person out there but the true beauty lies in the fact that within you know a predefined set of minimum rules it will rule you out because you're maybe a millionaire or maybe you don't have money it's it lowers the minimum you know barrier this is actually what bugs me the most about defy lending markets right so basically the narrative sort of the mission statement if you will is about extending opportunity about bringing credit to areas in which it doesn't currently exist but to be honest like no no poor person in Indonesia is going to collateralize their Bitcoin to take out a loan right that's just not going to happen right so basically the interesting opportunity for defy is social attestation and things like you know credit based lending it's not collateralizing crypto that doesn't exist in the developing world that much today right as I said because it is fundamentally over capitalized the idea that you should take that much over collateral in your position to be able to take out a loan it's you serious at best so we're back to the firm that see like I said you know maker thou it's just not a stable corner there's also lending for the call right and defy learning for the call makes a big pie off like you know the whole entire defy space so we are working with an Indonesian wallet partner based out of Indonesia so what they so what they essentially built as the first layer application on top of makeup protocol to enable value transfers via dye and of course provide loans and issuance of interest of dye deposits in this web wallet so because in developing countries a lot of villages and also here to Tier three CDs out of kyo-ahn series in Indonesia they do not have access to existing financial infrastructure for example like you know banking from branches so it's very difficult for traditional merchants who actually get like bonds so with web and able devices like this to enable value transfers you know among all these different merchants I actually see that there is a lot of potential there for defy to grow within just you know developing how many users do you have for that again no so right now they're still piloting the project so they are piloting the projects with the rural banks and Indonesia outside of tier 1 cities right yes I mean we need to understand that this way is still very nascent work it so I mean I I kind of continue I want to continue the conversation so what are the biggest challenges to maintain the device growth you think birdy yes so I think yeah and it kind of goes into the how you think about the last question as well which is in order to understand how to make defy successful I think we need to take a take a step back and say what is it we're trying to build here and you know when I look at this I look at it in the same way that in the 1990s and 2000's we moved communication we moved information dissemination from offline means to online means and we're doing the same with money and we're now trying to do the same with the financial system the defy and I think to look at the things we're building now and say well they they all look like toys at the moment to be honest some of those toys have really exciting potential set within them and some of those toys will end up thrown away and just experiments that don't go anywhere and I think you know the key for us to move forward and the challenge is that you that you mentioned about I don't find which of those things really have a nugget of something that is that's valuable and that actually moves finance forward not just defy and not just the crypto space but finance in general it gives us something we didn't have and also overcoming the boundaries of how do you grow and scale outside of the crypto world and also how do you deal with things like regulation and the threats from the incumbent and hugely powerful and hugely wealthy financial industry who may prefer to see something else happen and if we can overcome those challenges I think you know some of those different toys will suddenly turn out to look incredibly powerful incredibly useful yes I think like though you mentioned like important thing which is like how many users mainstream adoption and Bernie you also mentioned that how can we bring more people outside of the crypto into this world and let them use the defy so I mean we understand many people still challenge I still are challenging that that right now the defi services are only used by the crypto people especially if in suggest they want to just get the interest on if they own and we understand that it is still a challenge so my question to you guys is how can we grow the pie what kind of strategies do you guys have to grow the pie and invite more people outside of the crypto world who use the file I mean just lean you mentioned some of the initiative that you are your company does in Indonesia but do you guys have any other strategy yeah so we do I mean maker Dow has got the very big focus on Financial Inclusion so we work very closely with big institutions that you know like a line with the UN's sustainable Department go so in Latin America we have a team there basically introducing dye via an ex post machine community eggs I think one of the guys actually here so we actually deployed 800 devices in Latin America not just in the method to Venezuela Argentina allowing people to actually use that so I mean like you know that is paektu US dollars right so Argentinians can actually use die as the dollar savings account instead of using Argentinian pesos because for the past one year Argentina actually suffers about 50% hyperinflation and if you move to like you know like the neighbor like Venezuela it's even worse it's like million times so so I mean there's a lot of good use cases and the developing nations but when you look at say you know the global financial ecosystem there's the existing market size for traditional financial tools it's really huge you know but the thing is these traditional existing banking services are not addressing or if they fail to address the unbanked people in the developing nations and we are talking about 1.7 billion people so according to the UN one point seven billion people actually being shut out of the global financial system today and and well bang actually said that you know with stable coins I mean not just stable coins you know it actually it might actually help to mobilize three hundred eighty billion and untap capital so there's a lot of opportunities there you know when defy application starts you know getting tractions and the untap in the developing nations yeah I mean um banking the UM Bank people oh you heard a lot of it yeah you really want to see the real news cases and I feel like dough has something to come in or want to share some it's not realistic to expect an Argentinian to lock up a hundred and fifty dollars worth of crypto which my closet and I talking about CDP here sorry yeah yeah I mean yeah so you're not talking about CVP here generating jet generating loans against assets like it theorem you know what that dae-ho but instead you know they can trade like an old I as a stable coin they can spend I at you know like mom-and-pop shops you know that except I true you know like expose device why would they do that they just use the dollars yeah because the thing is they can't use they can't use Argentinian pesos yeah he's the dollar right why would they use dye yeah but if an yeah but but that's the thing even if they used I like it's just a stable coin narrative like with respect to the d5 movement overall I think it's disingenuous to say that you're on banking you're banking the unbanked like that's like 1.7 billion people it's a beautiful story but it's not realistic to say that you can take on over collateralized loans in the developing world because it's simply that but in reality that use case doesn't exist today okay so do let's uh step it again I don't think the fights only about the lending right so we want to focus more a broad concept because again like the payment is one of the subset of D Phi Sto can be one of the subsets stable coin can be one of the subset of D Phi so dough to answer your question but I think you covered some of that during your presentation but yeah like what are you doing to really bring those either two billion on beg people do that or I know it's not what you're doing but like how you are bringing more people to this D Phi word so I mean just the close of loop but what I was talking about before I think there's like pretty interesting use case that you can build around like decentralized credit and loans and things like that right and I think like the beauty of that is social attestation so the challenge here is I was really hard to build that kind of trust social trust on the blockchain and then it's really hard to bring in you know participants in the developing world to come into this but like the interesting use cases if like a bunch of people provide social attestation for somebody that needs money and then they are the ones that get interest rate on it then that's pretty interesting right because it opens up a new credit market where it didn't exist previously just like to be kind of lending yeah it's kind of like a ramen Bank or or Suffolk tough so like micro loans as well anyone can be super interesting but I don't think you should have require you know crypto collateral on the part of the person that doesn't have the money right because if it's not he doesn't have the money he's not gonna have a crypto right well the good thing is maker Dow actually launched them vertically oh so yes so like even like the real estate can be yes that's what I wanted to actually talk about so so for now see the you know when you actually generate loans against your own asset by a CDP right it's just a theorem but when we launch multilateral die we will be opening up a lot more different diverse asset types the total asset types and potentially further down the development roadmap tokenized real assets as well for example tokenize bonds securities real estate yeah and actually invoice and invoices as well so we did the project with one of the bakers I mean builder the pilot actually was one of the biggest of trade finance company or supply existing supply chain company that has got 1.5 million customers globally so what we dip of them was that we actually integrated a die credit system on the existing supply chain network so you know trade finance there is a huge use case because there's about nine trillion dollars being trapped in the outstanding receivables for example if you have small medium businesses you know and the payment term is like 60 days or 90 days by the time when you receive your payment from a supply it would be gone out of business so I think the the the the use case here is that we are trying to democratize financing for small medium businesses by helping you know small medium businesses what you use tokenize invoices as collateral and in return you know getting in that yeah how about you Eric and Bernie yeah yeah I mean I think you know one of the things we have to look think about here is there's a 1.7 billion person market for these things but 1.

7 billion people are not all gonna queue up tomorrow and that's not the space and that's not the time that this industry and what we have to think about is you know the Twitter's the same when Twitter was launched the people who use Twitter were not the people who were going to use Twitter they were the people who are the fast followers and the early adopters and you know we need to look for those among those 1.7 billion people as well as the rest of the world and so you know whilst I think it's fair that right now people are not going to use crypto collateral in general because the the wallets are too hard the on-ramps are too hard every news agent doesn't let them you know put their pesos or whatever into a inter crypto that might change in future and that's a world where Haiming get to and so what we're trying to do is we're trying to look for who are those early adopters in the fast follows who are those people among those 1.7 billion who have a really strong use case and a desire and interest to learn and understand the technology and they can actually say you in the case of Vega we're thinking about letting people trade derivatives and appear to appear way and we're thinking about you know maybe the the small importer or exporter who has a dependency on another currency maybe they'd like to hedge that dependency but they don't have the kind of banking connections and ability to do so so how do we reach those people make it as easy as possible and find the ones among those who are interested enough to learn and to maybe jump through one or two hoops for the first year or so and get started and show their friends how this works and as people start to see the value and demonstrate it and as people start to use it they'll tell others and it'll seem less scary and much easier to sign up but also you know the government's and the big institutions will start to take notice and they will start to make it easier for people and they'll start to remove some of the roadblocks too and I think you know we have to take that step by step approach to getting those people on board rather than just saying well these 1.7 billion people aren't all gonna use it tomorrow so we might as well give up mm-hmm Harry do you have any thoughts well yeah I mean I I don't think it's something that we can do alone it's definitely impossible so we're looking for different partners in several aspects to actually broaden that use case and and brought you know large and that scope where defy reaches out to other people and I think Tara is one of the potential partners we're talking about and what I wanted to you know you know it's been we launched this service like two months ago we've never promoted it domestically nor internationally but I mean numbers are pretty much at the early stage or it must be irrelevant out of now as of now but then we're actually very surprised because over people from over 50 countries actually visit our site and I think you know how ah I don't know we have no idea maybe maker maker Dow helped us I don't know so it's pretty amazing it's pretty amazing right so I mean it's like you won't be able to reach the mass at once but it's gonna take time but like like you said Bank the unbanked I don't know maybe reach the unreached doh said who would be actually willing to collateralize crypto assets there are actually tons of people doing that because they don't have access to a dollar or maybe because they don't have bank accounts it's like it's not really irrational I come from traditional finance so the fact of over collateralization really seems very irrational and you know miss use of capital allocation but you know things take time and right so era you mentioned that you are coming from the traditional finance word so we know that I personally think that the goal of the fie is kind of restruck restructuring the existing financial system in a more open and permissions way but again there are still main many challenges that we are currently faced so my question is what are the biggest advantage of the fight over existing financial system or services and what are the what would take offer defy to start really challenge mainstream finance are word so I think you know we've talked about one of the big advantages I think already which is around the ability to reach reach everyone everywhere and that's not to be not to be ignored but I think there are some other really fundamental advantages and two I'd like to focus on the first one is the idea that you can remove the middlemen and if you're a trader you know and I confrontational finance and I work for traders in the biggest investment banks they get a pretty good price they get very efficient execution the further you get from them the more layers of brokers and bankers and and other people just taking their cut you get so that if you're someone with a small business or a medium business you're paying far too much to access these markets to these middlemen and so the ability to remove the middlemen to correct connect people directly to the products the capital the assets that they want and do that in a completely open way is really really valuable and more we may make for much more efficient trading much more efficient finance itself a much much lower cost the other one that I think is super important is what you'd call permissionless innovation and that's the idea that actually if you put all the decision making about what assets to issue want to make tradable what products to create if you put that all in some towers in New York and Hong Kong and London and Singapore and you say to these guys like you make them all the product you make those decisions they'll make good decisions for them but they won't make good decisions for the other like 7 point whatever billion people on earth because they can't even see what most of those people's problems and challenges are so the other advantages of spreading this out and democratizing it is that individuals around the world and companies around the world can see the needs that they have in the locations that they have in the industries that they are intimately aware of and they understand and they can design and build assets and products that really work for them and so that innovation will mean that instead of everything getting created in those big cities around the world people are creating the products and the instruments and things that they need and trading it with the other people who need those - mm-hmm can you think of a way to do that like while being compliant so like one of the interesting things that I think if I could be applicable for is sort of you know breaking down borders in finance right so I it's basically like the only thing that's creating arbitrage well differences in interest rates between like Europe Indonesia Mongolia Korea u.s.

is basically a capital controls right so can you think of a way to sort of yeah even out the interests really you know the compliance things really really important them one of the things I think is a fallacy that you get from some parts of the industry is the idea that if we make it impossible for the authorities to see what people are doing then that's okay and no one has to obey the rules anymore it's kind of like that's not a useful way of looking at it because if I'm a citizen of Korea or a citizen of the UK or any other country or if I'm a a business that has locations there then if people find out that I'm breaking their rules and they pick me up in a van and take me to prison and I don't want that to happen and I'm certainly not willing as a normal citizen or as a business owner or whatever to risk that just to get access to a slightly better product and so it's really important that we solve this and the way we think of it is in a decentralized system where there is no central authority it's on everyone to obey their own local but the system can provide tools that help and what we're thinking about here is the idea that you can actually get a station you can get cryptographic signature against that your pseudonymous public ID that says I have kyc approval in the UK or whatever other regular pretty but could be anywhere on earth and the system doesn't actually even need to know what those approvals are it just knows it's got some signatures and the cool thing about this is that now one system with one source of liquidity there's global can start to use those things to allow you to add constraints to your actions on the network and you can say well I'm here and these are all of the things that are my constraints and I can only trade with other people who meet those and so you can have a global pool of liquidity in capital and you can actually route liquidity around that pool in all kinds of ways and connect people via multiple hops but you can do that while making sure you have a cryptographically provable verifiable proof that I've never traded with anyone who I can't legally trade with and I think tools like that will become absolutely essential to open up this kind of defy ecosystem to to the wider world got it I wanna ask the last question because of the time restrictions so I know that Tara you have a great partnership that you just share and I know that the XM has been ripping a lot of new business so just to all of you what's your Rodman and what are you the most excited about next six months so like for me personally I think the credit bonds market is super interesting to us because in terms of the regionality of where business is focused I think it can have significant impact I I think though the focus around if I should focus a little bit towards you know having people help each other in some sense because I think like you might say that sometime in the future this might be possible but I think it might be easier to have people borrow each other money rather than you know saying that liquidity constraints prevents you from selling your crypto therefore crypto collateralized loans are valuable because in that case even if your borrow die you can still need to sell it to buy things right so I think like having a social attestation tool where other people putting on collateral for you in exchange for interest is a super interesting model and I'm excited to see more of those develop we're actually planning to increase that asset pool within the next two quarters with an integration to another bigger platform which we'll announce at that time and I think that'll be when the bigger asset pool will be like Quonset dough said much more helpful for all the people who might not know about defy but would like to you know have it a try I mean I mentioned about my cholesterol diet so you'll be backed by a lot more different asset types and then so you know like adding bill wall tokenized assets to multi collateral die having that capital flow being unlocked in the traditional market today so I be a pretty excited about that and then after launching multi class world I would be packing packing die to like different national currencies for example yen die or euro die I see that I'm actually pretty looking forward to see you know the growth of defy space because I mean we have come a long way I mean I started I mean I started working for like maker about a year ago I look at defy pals at that point of time you know like at one point of time we actually locked up about five hundred million dollars worth of aetherium and our smart contracts so and then and then compound finance came in and then start that you know locking up about a hundred over million dollars worth of you know and in the defy ecosystem itself so I mean if you look at the month-on-month growth is actually quite astonishing like you know like it might not be like lending protocols but it could be like you know like synthetics assets platform trading platforms or taxes that are building within the space itself yeah yeah and I'm super excited at the moment about I mean obviously for the last a year and a half and more we've been building and designing Vega and instead of working away on it and in the next month or so we'll be launching our first private test net and I'm really really excited to get the protocol in the hands are the first members of the community and people we're also going to be massively expanding our community operations so we're actually out there talking to people both in the defy community to other projects to people who might use this but also to traditional traders and to people who are used to using these kind of products in other settings and we really want to bring all of those different slides together and I'm really excited about just understanding how people interact with our protocol and how we can shape it to best serve all of the people who use it great so according to Microsoft they say the financial industry is the area where that the blockchain can disrupt the most and I think based on this conversation we understand it's still a very early space at this point we have about 500 million USD worth of eath is locked up in a smart country still small we still need to talk about more users more non crypto people to come and use the device but from my personal opinion everything starts small 20 years ago when first the web economy came up it was really small but now it is very meaningful as we all know so I hope that we will see more different diverse business model within defy not only the globalized I hope to see that more people start using the defy product so thank you so much for joining the panel and thank you everyone for listening to the panel thank you thank you [Music] thank you guys how much [Music]