Thomas Scaria ~ Bank Without Banks: Loans on the Blockchain Panel

[Music] okay so this is the rent without banks panel our moderator apparently is already is still in another panel so we're gonna start without them and let them walk in on it it's go ahead hey guys so my name is Nadal Hollander I am the founder and CEO of a company called Dharma labs we are building something called Dharma protocol which is a globally available and decentralized peer-to-peer lending platform for crypto currencies and yeah I'm excited to chat about that and and decentralized banking in general hey guys my name is Stanley kulikov from the CEO and founder of eBay which is behind of Edlund will eat lend maybe that's the American pronunciation basically we provide a marketplace for crypto backed loans and we have been operating this for a couple of years now on maenette and yeah excited to be here hello my name is caleb Slade I'm a co-founder and chief knowledge officer for salt-based here in Denver we are also doing blockchain backed loans we're doing US dollar denominated principles deposit straight into your bank account backed by Bitcoin aetherium dogecoin and litecoin and most recently u.s. DC so excited to be on the panel and talk with you guys what you guys think we should talk about first very decentralized but so effective well maybe we should take audience questions first any questions while we await our moderator yeah anybody have a question yes okay so I'm gonna repeat the question so people here so the question was are there any regulatory regimes that we are worried about in particular in the u.s. that are either bottlenecks or blockers for mainstream adoption of crypto backed lending I will kick it off as to the rest of the gang first definitely when you're lending in the u.

s. states as a us-based entities especially but really if you're any entity lending to US consumers most states it's a state-by-state individual licensing process it's very friction it's very difficult and takes a lot of time and money but if you want to go about it right you want to keep yourself and your customers safe and your company safe you just have to go through that process so yeah I think the whole regulation is interesting question yeah basically am I worried about regulation yes I mean especially in the US I mean things are pretty over regulated here compared to where I come from from from Finland but I think like in kind of every model we need to think about regulation but when we are thinking of like trustless systems and recentl ization it's where the collision comes in in one way you need to basically think what laws apply and and who is responsible of let's say if you deploy smart contracts which are based on depth and on the other hand some of the decentralization kind of like mechanics behind are kind of colliding with with law as well and regulation and I would say it's very difficult thing at there's a lot of gray area when it comes to cryptocurrencies and and blockchain technology but it's very difficult field to operate and I think for the next couple of years that will be very interesting question when we have these centralized systems for example Texas and who is responsible there or when you initiate that so I will definitely agree that regulation is something that we're worried about and a bit of scared as well so a common denominator for the way like lending is structured for for a lot if not I believe all of us is that there generally tends to be a fairly peer-to-peer component to how the loans are structured like there's somebody investing in the loan and then somebody borrowing it and I think it's important to note that like it is legal and compliant there are legal and compliance to do peer-to-peer lending in America there are many peer-to-peer lending businesses this this has been a wave that has come and gone already of like kind of like companies starting peer-to-peer lending businesses and so it's it's not something that's explicitly like there are explicit blockers to just there's a lot of friction to actually getting there and in particular there's a lot of friction if you want to kind of provide if you want to adhere to these sort of values of open accessibility for everybody on both sides of the market that's where things get really really difficult because in particularly in the u.s. we have a lot of very stringent investor protection laws that generally put a lot of constraints on the degree to which you can allow retail consumers to invest in loans now this is an immensely complicated subject this is like there's not a one line response to any of these questions and it's it's super case-by-case on the basis of what you're doing and how you're doing it and what assets are being traded and you know all that whatnot but the main this sentiment that I would communicate is that there isn't an explicit blocker per se but the sort of utopic vision of like anybody can access the market without any hindrance is likely to not fully pan out at the very least in the US I mean I think what we're seeing is really just it's an it's indicative of such a new technology that doesn't fit the same paradigms and the same structures that we're familiar with or at least our regulators are familiar so we do have this like - tidal waves hitting into each other where you have both the SEC and then you have state regulators off like you know there's just hundreds and hundreds and hundreds of individual regulatory agencies in the US and they're all wrestling with how do they kind of push a square peg through a round hole and it's been a little messy and then it's slow that's kind of the you know par for the course with regulatory changes it happens very slowly but the technology is not going to stop innovating so I think you're gonna see a lot more movement and pushback from the more like on chain decentralized contract driven lending instruments where you do have individual peers funding other individuals debt in a very simplest fashion it's really exciting for us we really want to help do anything that we can to bring this to the forefront as well I'm still impact our business we believe in a very positive manner but until that time it's really just a from Saul's perspective we want to take a very active and engaged perspective with regulars and help them come along and help them understand the upside of regulating this in a better way than the worse way maybe I could add also if you think about like Edlund or or even like the stuff I have read about Dharma basically that kind of it's it's its basis of decentralized finance which basically means open permissionless system that is censorship resistant now if you put this thing like together and think how it fits into regulation it just doesn't fit right it's kind of like very difficult to try to put something this kind of novelty to something that we have that just kind of said that it's its own new technology and and the the whole aspect that we don't know how to handle it and I think that's might be even a bit of perspective that the the irregular there might need to consider a bit as well but nevertheless I mean laws regulations are there to protect some interest in some stakeholders and for example when we are running even these interest systems or smart contract based systems like for example Atlin we need to always think the end-user I mean what kind of risks the end-user is going I mean or should we even advise educate the user or what happens if the user loses its key and and there are so many things we need to consider and if those things are not handle it might be that we will not get much more adoption that we are getting at this point I think also one of the things that will really drive this space as a whole is really an injection of capital and anything that we can do to facilitate as much capital coming in to build up the credit availability in the credit layer globally is going to help push this space forward and the reality is if you look at prospers and so Phi's and a lot of these well you would consider peer-to-peer lending platforms a majority of their capital isn't actually coming from peers it's coming from institutions that are lending into this institutional lenders who are bringing the capital to the prospers insofar as and lending trees etc and what they're waiting for these institutions is this regulatory framework so that they can feel protected shareholders and that they can remain compliant because otherwise they won't put their capital into it so there's a and I think that the sound regulation if it comes will come a lot from pressure from the the traditional financial institution who really are just waiting on the sidelines waiting to jump into this because they're not they're not just stuck to the dollar like a lot of people think they are they're in the money business not the Fiat business right and they're they want to provide a product to their customers that's of value and they're gonna follow their customers and their demand so I think that's probably where the most of the force is gonna come just as another note on this front and then we could probably transition to another topic because we've we've been beating this this this red horse dead but and it also looks like our moderator an additional panelist has arrived and so this this nice intro period is coming to an end but as a last point I think that there's a distinction between the protocol layer or rather the contract layer and the application layer being like open permissionless and accessible to everybody and what I mean by this is that like Hello is that you can have an application that leverages tcp/ip in order to deliver packets to whoever and those packets can contain a you know the bits and pieces of an application that is legal or illegal but at the end of the day anybody can use tcp/ip and this was powerful about it and I think that as technologists designing systems for this you know idyllic future financial system I think we ought to prioritize openness at the level of the infrastructure where if you are technical and you want to use these pipes and rails nothing stops you from doing that but where I do think it makes sense for regulation to come into play or at the very least you know a consideration of compliance is that the application layer if you are actually facing users and you're using the pipes to deliver products to people you have a certain responsibility to comply by the regulations that govern those users interactions hi I'm Kyle Kistner with I'm co-founder of bzx network moderator of the panel I was on another panel kind of ran over a little bit but I'm here now so hello everyone hello everyone my name is Alex patrone oh I am CTO and co-founder of block board and we are doing the digital asset landing platform that allows you to interact with all of the open landing protocols on ethereum blockchain and it's the only place that you need to interact with in order to decide on long terms or take alone on those protocols so if I could just ask you guys what have you talked about so far have you talked about your okay question about regulation all right so go ahead and let's go around and talk about what's your vision for defy 2019 how do you see your projects reaching mainstream users how do you see it interfacing with institutional users and what role does your project play in the ecosystem so um so salt really is I mean one we are paying really close attention to all the layer 1 protocols like Don protocol and acceptance and we think that that's absolutely vital but we're really focuses more on the layer 2 or layer 3 on ramps and off ramps for those major injections of capital for the institutions to be able to join this new ecosystem and for consumers both existing blockchain users as well as for new people who aren't like a part of this blockchain community to have these very easy lubricated paths to join this ecosystem and have access these financial services yeah I think in terms of seduction in in in Edlund basically what we have thought about in Ovid for the past couple of years is basically we have trying to build more features more ways to borrow more assets but one thing in we really realized in in the whole Main Street adoption is kind of like these Central's finance is a ecosystem game so I think and a bit of view as game as well but I think the more d-5 works together I mean when Edlin can work together more with with Dharma block board kuiper maker Dow and we all basically love each other we're happy and we're providing more users to each other and getting more people into the mainstream I mean well kind of like our decentralized ecosystem I think then we grow together so I think the kind of issue and I go it's like salt salt of course focusing on gateways to provide more users as well so to keep the currencies and then from that to defy and I think that's the one of the biggest things the whole eat their very selves about people building things small things and we connect the small things to achieve bigger things and then the second thing is the UX game I mean our UX sucks we all know it I mean the whole defi UX sucks but we have done a lot of work on that all of the projects out there I mean I think there's an audience a couple of users who have used our application two years ago and it was completely unpleasant but we have worked we have put a lot of work into the UX and lot of projects has done that this wall and I think that's big part of the whole accessibility that basically if we are as easy to use as for example centralized systems then we can compete I think so yeah so first of all echo all the points that have been made I think I think that onboarding the institutional class of investors into this new asset class is a huge beale deal I think that the way in which these various defy primitives like start to get jumbled up together and recombinator dand and kind of mixed up in interesting new ways is fantastic for growth and again like I also agree that UX is probably the number one thing that needs to be worked on right now honestly even more than things like scalability particularly for things like lending where you don't necessarily care as much about a high throughput all you care about is like whether the gas fee for deploying this contract is gonna be like sufficiently low to make the the transaction profitable as for mainstream consumer adoption I'm gonna be honest I don't think that's gonna be happening in 2019 I think that's that's not the market for dissent for for crypto lending right now and it won't be for a good amount of time I don't know what that time horizon is the reason being that at the end of the day right now the use cases for crypto currencies like the most useful thing that you can do with a crypto currency is I ourselves to another cryptocurrency like that that is the thing that everybody uses crypto currencies for is trading and so until that barrier gets crossed and it's easy to use dye to buy something on Amazon or even at my local market I presume that the use cases for at the very least like crypto backed like smart contract based lending will be largely largely speculative with that being said though we're getting really close like I mean you guys if you guys have tried the the buffa corn burner wallet interface for using your die to pay for the food here I mean it's incredible it's it's seamless and I think like if we these things move very quickly and as soon as cryptocurrencies like die become usable by normal consumers that opens up a whole new ballgame for what decentralized banking and lending technologies can be used for all right things yeah I agree with the guys that the user experience was the biggest problem with the kind of days and right now we did a lot of stuff to increase the usability of our applications and right now like we need to bring more liquidity to our market because we're not competitors each other because the market is so big that it will be a lot of use case and all of us will be catering to some specific use cases so but we can't grow faster faster than the market itself and right now the only like a couple of use cases is the borrowing land landen I mean just for doing short long positions just to have a working capital for exchanges so it's not a really big market and we can't do anything else if we have the loans backed by a crypto loans backed by other creep so I think the the next directions that we need to explore explore is the recognization of different types of physical and intellectual assets from the real world and which will allow us to bring much more user use cases to our platforms for example if you have the recognized depth assault adapted better by recognized physical or intellectual property or by company shares like we can do like we can make this market drastically bigger than today and it will solve other problems is not the so big as their accused cases and the market and liquidity that we have nowadays in my opinion so I wanted to add something to that really quickly it's a fantastic point about the new sorts of assets that are gonna come to market I think a really big trend that may actually come sooner than anything related to leg die or you know like stable coins being usable in the mainstream is synthetic assets that replicate things like the S&P 500 or something like that so there's a lot of awesome projects that are starting to bring this into production where you basically just like have two counterparties put up a bunch of collateral and then you just kind of create this asset that like tracks the S&P 500 and anybody in the world can use it you don't need to be a US citizen or anything it gets just it's just a token that's a pretty wild prospect because all of a sudden that introduces this idea of like let's just replicate all the asset classes that we have in the existing financial system and just create them in this permissionless context where it's you know really easy to frictionlessly trade them and then that just opens up an entire new field for what projects like ours do in terms of things that you can borrow against or lend out so I think that have raised a really good point there about mainstream adoption being allows off so I wanted to ask forget about the mainstream where do you see adoption of defy by crypto users themselves happening because this so there's there's two big problems it's one you need crypto users to adopt and to you need to onboard the pool of you need to make the pool of crypto users larger that'll get the mainstream on so mainstream adoption is more about crypto adoption defines big problem is getting its own crypto native users actually using it instead of all the centralized stuff or just ignoring projects altogether so where do you with what do you see the root is to getting adoption within our own communities and second just a related question what are your views on decentralization versus user experience and how that might relate to getting our own decentralization valuing community buying into the products we've already built so I think I think one of the big things standing in the way like Nadav said is the utility that is available when you hold a crypto asset right you can either buy or sell you can either transact it or not transact it and in a lot of ways being able to leverage something is a utility so when people ask what can you do with Bitcoin being able to leverage it for cash or for some other cryptocurrency and as the other projects are doing that's a really serious utility if you look at like the housing market one of the reasons that it's grown so dramatically over time is because of the utility of being able to borrow against the equity that you put in your home a lot of people would not buy a home if they did not know that they couldn't borrow against that equity that they put into it so for us being able to give people the currency that they need to spend today which is still fiat currency your bills are still gonna be in fiat currency because my car die isn't accepted everywhere this is a huge gateway to not only drive utility for the token but also to drive adoption for new people to come into this space because if you think about your parents with a $40,000 Charles Schwab investment account they're going to be much more likely to put $20,000 into cryptocurrency if they can instantly he leverage that and pull out you know 10 to $15,000 in cash and hold that into their bank account because it's what they're familiar with it's like buying any other asset like a stock portfolio that they can actually leverage for cash so for us we think the ability to leverage these assets is absolutely a huge driver for adoption for both existing crypto users and new crypto users come into the space yep and and I think basically as a kind of decent loss platforms monetary base the kind of issue of course is we have similar issues as texas usually have so basically we have this big big liquid exchanges around for example finance and then we have texas which are getting more easier to use but people are still using centralized providers so kind of like we have the similar thing with the ux and like we're competing with the centralized providers so like i mean every day I wake up I'm thinking like how I can compete with salt and I'm thinking like how I can steal customers from salt and basically I mean we are competitors in in one way but kind of like my stuff is more like decentralized smart contract based and kind of like what I'm trying to do is teach like the cryptocurrency users and and the customers of salt like what benefits they could have from using our technology and I think what we can learn from like centralized systems and and and service providers is like they're so easy to use but we could be easier as well I mean it's just like we need to improve things and we should never forget that centralized exchange decentralized lenders they are actually a gateway for people into the crypto pool and there's basically where we are kind of like competing for the users so kind of like we are in some way piggybacking off each other all the time and I think that's totally cool but yeah that's that's one thing I mean the the whole being as easy as as you guys are and being as secure as like our platform is yeah I mean I think the way that we look about as like yeah we're all competitors in one way or another kind of well we see it more as we are all competing against this ideal lending experience for the users and that's really what we're all striving for and if we really get focused on how to stop the other people from growing it's not going to help us or our users or this space as a whole so really we we're excited for the decentralized the defy the on chain transactions to get developed to the point where we can plug them in to the systems that we have that are you know more centralized more user experience driven and have everybody benefit from them you know absolutely good sentiment yeah I totally agree and I think it's it's kind of like I would not say I mean you can't be all kind of like thinking like you you will be only like this and plus I mean sometimes you I mean I think you guys also think about smart contracts I mean you have some costs to this market up base so it's not like it's not like they're centralized bad guy and a centralized good guy it's actually like how we work together and I definitely want to see more work together in in lending space so that's that's that's what the whole ecosystem approach is so I think there's like this false dichotomy that people have often where they think about like okay either I'm gonna use a centralized exchange or a centralized margin provider or what-have-you or centralized you know working capital provider whatever and I'm gonna have an easier experience there or I'm gonna compromise in the experience in order to like you know have this decentralized experience because I'm more either ideologically aligned with it or because you know I care about things I counterparty risk I think that's gonna go away I really do I think that there are aspects of the decentralized exchange user experience that are actually significantly more convenient then kind of the centralized exchange experience and I'll list a couple so we all know that using things like meta masks and things like that are hard so that's that's a big con of using decentralized systems having to worry about gas and all that whatnot but on the flip side if I want to go and buy eath with dye dye I have two options right I can go on to like BTC or one of these centralized exchanges I can take the first step where I transfer my assets in I wait about an hour for not well depending on the asset I wait let's just say 10 minutes for the sufficient number of confirmations to have happen such that that platform is willing to trust that they now have my assets then I execute my trade then I want to go and pull the actual asset out which often has some sort of withdrawal fee or has some sort of limits to it or all sorts of whatnot and then finally at the end of this whole process call it 30 minutes to an hour later I now actually have like the asset in my personal wallet and I'm ready to do whatever I want to do with it and if you look at the decentralized systems that that exists you actually don't have this issue right like you can go to radar relay right now and you can instantly execute a trade directly from your wallet without even having an account on there and so why am I talking about decentralized exchange when we're talking about things like decentralize lending it's because I view them as being very analogous like in terms of their their value props compared to their centralized alternatives like using something like like Dharma or efj land you can actually go and basically like with virtually instant settlement take out a loan that is collateralized with minimal counterparty risk that's really really powerful and though it may be a kind of janky experience right now I think that's gonna change very very quickly all right yes so yeah rubies and of it look the VP just need to remove the bronze across of their decentralized applications of that for example if we can go to like the blog board take a loan and then we can open without relay or some other decks in other another tab in your browser and you don't need to wait to withdraw money from block chords and to like place the money to some decks we you can just switch tabs and do whatever you want like instantly and that's the great way we proposition for users and we just need to spread the like a different use cases across I mean like we need to allow more use cases with our cryptic cards that we all right now because like I don't I can't do a lot of things with cryptocurrency and that's probably the main blocker for the adoption for bringing my users through the space so for example if I will be able to buy like food in my supermarket with cryptocurrency or available to buy a car or house with the crypto it will be like easier for me to to transfer like all my financial activities to this this here and I think we just need to enable more use cases and organically we will have more users flowing to our ecosystem alright thank you everyone we're kind of running out of time here on the panel so about to wrap it up so thank you everybody for talking and sharing your thoughts and hope to thank you guys