Advancing The Convergence of TradFi & DeFi - TOKEN2049 Singapore 2022

good morning everyone not just Danny Chong co-founder and CEO of Tron chess before I start my presentation I want to thank everyone for being here today at this time so I was uh talking to a friend earlier on and they say that you know like whoever can make it in the morning at 10 A.M either you are very focused on trying to learn about new information are these and very determined to get new knowledge or you know you hardly go for any drinks last night but I believe that obviously everyone is here because you want to gain new knowledge and know about new things so very welcome um so on the topic of advancing the convergence of traffic and D5 the convergence of D5 and track 5 has been increasingly discussed and focused topic especially with the increase in investments from traffic over recent times the recent failure of crypto entities also brought out questions on whether crypto and D5 Protocols are in the optimized form for the future developments of the long run and what can be done better you know for this to sail smoothly into the future so over the next few slides we'll attempt to look at the developments that will lead directly or indirectly to the convergence of traffic and D5 it's not an easy task to manage within 15 minutes but let's try first of all we'll go into the introduction to D5 so just a very brief run through in case the you know like some of you are not familiar BTC Bitcoin was introduced as a concept following the market crash of 2008. uh following you know um the Global Credit crunch I think there's a Satoshi Nakamoto which all you have known will introduce the possibility of a cashless a peer-to-peer electronic cash system the birth of BTC was revolutionary in the fact that it gave rise to two major phenomenon on the crypto front one which is the rise of many cryptocurrencies with their own characteristics usages and benefits and two the development of financial Innovation and infrastructure over blockchains such as the likes of ethereum fast forward from 2015 to today ethereum had gone through multiple Forks upgrades and recently just finished the change from pow into POS system under the merge so the continuous development of ethereum was of course important for crypto and blockchain alike as it sets the foundation infrastructure for other blockchains to follow the evm or the ethereum virtual machine became a compatibility standard across blockchain that came after such as BMV chain cardano Chronos and so on the ethos if we look at decentralized Finance was to offer financial instruments in a decentralized fashion and D5 was actually the use case of ethereum which quickly flourished and gain recognition across blockchains so as you can see from the chart on the left is a bit small the total tvl of the D5 ecosystem after reaching a peak of around 400 billion USD currently runs at below a 100 billion USD dollars so defy 1.0 what is it defy 1.0 was the initial attempt to provide decentralure to centralized Financial applications using smart contracts and secured Oracle networks without the need of any intermediaries as expected because it was experimental users of D5 1.

0 suffered from issues ranging from liquidity security scalability uh economic photo economic sustainability and even Rock pools are those familiar with all the big incidents will remember uh what happened to one coin in 2017 4 billion laws you know like last year in June um we have iron Finance uh also losing Us 2 billion and queen Finance uh towards the end of last year which was a more moderate sum of 136 million dollars the nature of D5 was always set up to be somewhat experimental in order to encourage innovation but as defying matures it needs to remove a hit more concretely to deliver its core objective of enabling Innovative Financial products concrete steps needs to be taken to reduce volatility we are better security risk management project management and increasing transparency in its path forward so moving on to defy 2.0 is an ongoing evolution of D5 it can be seen as a continuous Direction and effort by defy projects to improve on the previous efforts of D5 1.0 it should also be noted that some of these improvements and upgrades are not just improving device but also making it converge towards acceptance a general acceptance and also towards traffic in a way so in fact it will be more befitting to call it D5 2.0 Plus or even 2.5 currently given the following you know current given that after the introduction of 2.

0 there were already newer Concepts that started propelling the development of D5 forward um some of the highlights of um D5 2.0 plus will be definitely the Improvement and the need in UI ux Insurance growth Revenue models use sustainability improve accessibility and architecture and among others regulatory Dao and so on focusing on maybe just a few we're looking at insurance there are stronger needs for insurance for both on chain and off-chain coverage um I would say that in recent times the growth in security and understanding of uh tax better should not be taken for granted there's always the need for insurance to guard against smart contract hacks uh tabs and other mishaps that you might uh not expect what we need to know is unfortunately currently now in coverage and insurance for D5 is extremely small percentage it is experience by ourselves as a protocol as well only a small percentage of the TV out for each protocol can be covered and which makes it not ideal so if someone wants to come and look at investment into D5 and they know that oh you know like I'm only covered for a few percent uh it's kind of like pointless so this needs to be improved uh it will be interesting to know actually the off-chain requirement is huge as well even tons of like interest into investing into crypto and maybe from there into D5 as well we are seeing a lot of traditional names uh we'll offers Insurance also coming into offering such covers insurance is going to be an important and integral part of the continuous investment into both crypto and D5 so we need a patient attention to that in terms of sustainable you I think a lot of people in crypto will definitely be very familiar with the tokonomics that comes along with a lot of the protocol which is issuing uh Native tokens as a form of staking Rewards such use are often very attractive I mean on extreme cases such use are always very attractive at the beginning stage and often become uh very very not attractive as people start to realize there's not much use case for the token and such extreme selling often lead to a negative spiral of the tokens and maybe even quick loss of interest in the protocol itself which is bad so in order to be a sustainable step forward independent U is important for building up the credibility of D5 protocols an example of sustainable you would be validated sticking with rewards coming from performing validation Services over blockchain networks and earning a portion of guest fees there's something at trunches that we already do on BMV chain uh also liquid sticking as well I guess which allows bonded underlying to be utilized for other usages there are also other Innovative products that we could be looking at and the likes of options Structured Products could make a lot of difference to the space of D5 next we look at growth Revenue models I guess this is quite unusual and normally not being discussed at a D5 level a lot of the protocols were not very concerned of establishing Revenue models initially while given the experimental nature of D5 and good times and you have lots of adequate funding um you know like there wasn't really kind of like a focus on that but with the market capitalization at a low I think both Theses and Protocols are like have recognized that a self-sustainable earning model is crucial for protocol to develop positively forward so understanding and remoting towards D5 2.0 plus is also directly converging towards threat Phi and it can be seen that the direction of path is already set in place for that interesting point to know that is technically actually D5 worked extremely well and flawlessly draw the extreme up and downs of volatilities in the market um I and I know for a fact that you know like uh despite the market trials a lot of the protocols we which we speak to every day are still working hard to deliver new innovations that are robust and secure so the current traffic markets I guess um a lot of people would be like oh yeah you know like we can converge and we can do what we want uh in crypto and D5 but uh traffic markets may not be interested so the bottleneck definitely is true for some of them especially in terms of like a regulatory requirements or financial institutions to work with uh same you know like uh companies that has regulatory requirements uh or approvals as well so it limits your ability to gain exposure in terms of cryptocurrency and markets some companies itself could be basically not set up in terms of running the risk and being traditional Finance if you can't do that there's no way you can invest so you know like that's also very lack of uh consumer and investment investment protection which makes it difficult for your everyday person to come in as well which obviously there's a lot of uh um restrictions on on the individuals coming in on on investment into D5 X and theft is also one that people need to be protected from obviously there's always other AML issues tax evasion Market abuse and so on but if we look at the recent news that's have been coming out it you should be very um happy or to see that you know there's a lot of improvement in the landscape some of the examples are listed there BlackRock Fidelity investing 4 million in circle usdc American Banks such as JP Morgan City offering trading Services there is also New York Stock Exchange which earlier they announced a trademark application for nft and Singapore you know DBS offering its very own digital Exchange and even if we fast forward to September in the most recent news I saw that DBS already started offering BTC on this app on this platform so this is a this is very fast and forward-looking for Singapore in that sense in the NASDAQ you know like offering custody services on crypto um Ura setting up laser digital to invest in D5 C5 and web3 and so on this is actually kind of like a first year seeing from Banks as well moving into this space so what are the bridges that we need to actually focus on between track 5 and D5 low let's look at people I think people makes the main difference of the advancement between traffic and D5 um people coming in from traffic will be able to provide expertise and knowledge of what they have experienced over many many years and this can be useful um why is that because if we have to look at it risk management treasury management are some of the important aspects that such experience could be bringing if we remember the recent collapse of Carolina and the cascading events that follow through was a wake-up call if some of these protocols had treasury management not outsourced but managed internally unfortunate losses could have been prevented so I believe that as defy grow such expertise should be kept within the protocol itself or there's some knowledge in that perspective the transfer of knowledge is only one aspect that is important but with Personnel of experience and track record coming in the kind of credibility becomes even more uh prolific D5 becomes increasingly attractive and credible for traffic and mainstream it could be even soon that one day we'll see track 5 starts hiring people from D5 and and this will be time where you know the knowledge and expertise gaps are actually moving very in sync next intermediaries I think this is a very important highlight that we need more and it's probably um not as enough for now we need to have more of such entities in the intermediaries there will be entities that stratify the likes of the eams family offices private Banks and improvised investment banks will be able to work directly with because they have license so the intermediaries will not be able to just help you with on-ramp off-rem but they will also help you do your all your sticking restaking Auto compounding processes into D5 protocols there will also be weekly daily market in terms of dollars and um to to the end client you know like it's very simple they put in USD they look at their multi-market report and they get back their investments in USD so it's a clean process the entire process makes it for entities with little knowledge of D5 to invest under proper Professional Care that's important the intermediaries will also be able to educate by sharing investment knowledge and Trends so long terms the end investors will definitely have more lower rich and ready to invest into D5 directly and to look at the regulatory support I think what we need to say is that crypto and D5 definitely comes into more scrutiny and understandably especially with um recent blow-ups or unfortunate incidents that impacted institutions and individuals alike but we can also see a lot of the bright spark that's incoming including a lot of the countries like uh France Singapore Dubai Italy and so on actually giving crypto license and even for Singapore it announces ambition of having a being a crypto Global crypto Hut at the same time started project guardian to look in tokenization and defy uh we as a D5 protocol are also working with adjm to formulate formulate ways to regulate and also legitimize certain D5 protocols so there is a real interest from government regulatory bodies to help D5 move ahead so in conclusion I guess from hindsight um we can see the good the bad and ugly across the D5 Spectrum the retrospective view is modern for us to understand learn and ensure the mistakes that we have encountered are not repeated and the thoughts and considerations is important for us to decide our next step forward I would like to emphasize that you know like mistakes are not failures real failures come from repeating mistakes so the future is bright and I definitely can see the positives the world will enjoy when D5 and traffic converges it may not be a fast convergence but it will be a definite one and with that I would like to thank everyone for your attention and time those who would like to have a further conversation and understand more about trunches we have a meeting room at 4401b thank you very much