On October 26, 2020, at the 7th Old Friends Reunion IOSG DeFi Summit, we invited Xinshu Dong, partner of IOSG Ventures, Santiago Roel Santos, partner of ParaFi Capital, Michael Anderson, co-founder of Framework Ventures, and Ben Perszyk of Polychain Capital. Four top institutional investors discussed and shared the theme “Like never before: A new era of DeFi investment and beyond”, and talked about new gameplay, new challenges and new investment concepts in the DeFi field.
Xinshu (host):
Hello everyone, welcome to the investor panel discussion at IOSG Old Friends Reunion DeFi Summit!
My name is Xinshu, a partner at IOSG Ventures. A little bit of background of IOSG Ventures, we are a venture fund focusing on investment in the blockchain and digital asset space. Founded back in 2017, we’ve so far invested more than 60 projects in terms of DeFi investment. In 2017, we’re investing to MakerDAO and DDEX and our more recent DeFi portfolio projects include 1inch, UMA, Synthetix, Gelato, DODO and the like today is my great pleasure to have leading investors in the space with me and we’re going to have a very fun conversation talking about new excitement, new challenges and new investment thesis in the space. So we can kick start by a quick instruction of our panelists maybe we can start from Ben from Polychain Capital.
Ben:
Hi everyone, my name is Ben at Polychain, I’ve been there for just over two and a half years now. Polychain obviously has been very prominently involved in the space, we invest pretty much every layer of the Web 3 tech stack from layer ones up to user facing applications and then also in market infrastructure type businesses like exchanges and what not we were some of the very first investors in the DeFi space the first investors in MakerDAO. For example and some of the first and largest investors in Compound we’ve obviously followed the space very closely and made subsequent investments since those very early ones. This year has been obviously very interesting for us and we have been following the developments very closely and look forward to continuing to be involved, continue to make deployments into interesting projects and capable founding teams.
Michael:
We started about a year and three months ago, and we specialize primarily in DeFi. We’re a bit of a different firm in that we have a venture thesis fund as well as a technology development company called Framework Labs a team of engineers, technologists, developers, program managers who participate in most of the applications within the DeFi space even sometimes before we make them.
So most of the time we’re large users of the DeFi protocols as well as investors in them, some of our biggest wins thus far Chainlink, Synthetix, Aave, YFI. We’re really excited about what this next year could bring and all the attention that DeFi has had over 2020.
Santiago:
Definitely ParaFi like Framework is fully focused on DeFi and really where we take the unique approaches is being active users of these networks that really informs our thesis in the space how it’s evolving liquidity is the lifeblood of these networks and so by being active users. We consider ourselves users first and investors second. I think I’m sure we’ll touch on this but this year’s been, to Ben’s point, kind of a renaissance in DeFi. But you know there’s been two years of active development and so that’s something that a lot of people don’t really appreciate there have been protocols like Synthetix, Aave, Maker and Compound that have been building for the last two years in earnest. So really what we’re seeing now is the next iteration of that progress and so we’re still very early a lot of these are still experiments, but I think we’re entering the second phase in DeFi .
Xinshu (host):
I think you just brought up a very important point, because many people probably see more of the fruits. we are seeing this year in the DeFi space but actually there has been years of hard work putting into that before this year people probably were having a lot of even challenges in convincing the community that this is the thing, so we really should congratulate all these teams that have spent years in building the cool stuff so that we can see the proliferation of DeFi this year. Maybe just to answer one question that our audience will be very curious about from early on of our discussion what do you see will be the new type of DeFi applications in the next 6 to 12 months?
Santiago:
We’re starting to see you have protocols that build core infrastructure like core money or verbs in finance like lending, borrowing, insurance, derivatives and so, I think like that was the first instantiation of DeFi and really a lot of what we’ve seen is copying traditional models and finance into this sort of highly integrated and composable ecosystem and then the idea is okay what do we do with that because there are a whole host of applications that you know can be applied in this what I think of DeFi broadly speaking is transfer of value with digital scarcity with programmed incentives and so that really in global pools of liquidity .
A project like BarnBridge is perhaps a good example of that that leverages a lot of infrastructure that has been built historically to create tokenized risks and tranching creating effectively structured products 2.0. I think I’ll sort of pause there because I’m sure Ben and Michael have a lot of things to say on this point and then maybe we can come back around but yeah (I’m) excited about the projects that are now building on top of Synthetix, on top of Aave or leveraging a lot of these legos if you will that’s right and I certainly agree with you that we have already started witnessing a process where some of the products and structures in the traditional finance are now being experimented in the crypto space so I’m very excited about all these experiments. I’m sure that not 100% of them will find their success in the crypto space because many things are different but I feel this is a necessary process so that we can at least test all these ideas and I’m sure some of the innovation will also come in the process of making it localized within the crypto context.
Michael:
I definitely agree with everything Santiago put out there. I think the way that we think about it at least in the progression maybe not of the investment landscape but of DeFi in general is that the next iteration or wave of DeFi is going to be eating centralized crypto finance. We’re already starting to see this with DEX volume, Uniswaps surpassed Coinbase in September. The next phase of that will probably be something favorable to decentralized derivatives coming online in the next 3 to 6 months as we look to the future you know. It is the bridging of CeFi and DeFi or TraDeFi and DeFi. However we want to call it that is the third iteration after this spark that we’ve seen in the last 6 months. The next 6 months being DeFi eating CeFi and then moving in traditional finance.
Xinshu (host):
That’s kind of the way that we like to look at the world yeah just a follow-up question on that in the process where DeFi is eating the pie of CeFi. do we see it as an inevitable process where some of the more centralized elements and components will have to be included into DeFi. What would be the implications if that’s the case well the eating of DeFi into CeFi is really the disintermediation of the centralized crypto borrow and lend desks.
Michael:
The disintermediation of centralized spot exchanges because you now have for the first time people have a DeFi product which is open and transparent and fair at a product-level table states with what you would have in a centralized exchange or a centralized borrow and lend desk and that is a competitive advantage from a product perspective. Because high cryptographically secure trust to something that is the exact same product look and feels and then it becomes a question to Santiago’s earlier point about liquidity and availability but as more assets flow into DeFi that becomes less and less of a concern.
Ben:
You’ve hit on a couple of them interoperability and I think will be a huge one. You know as new interoperable networks come online and become feature complete. I think you know Polkadot is a great example here of one that is not even feature complete yet but that is already starting to see the beginnings of a kind of DeFi movement taking root and I know there’s already conversations about how to get exogenous assets onto Polkadot and the implications there for the broader DeFi landscape are very interesting.
Santiago is absolutely right that as with any sort of financial or capital markets liquidity really is king here so I think one of the things that we saw this summer that really exploded and I think took a lot of people by surprise were these novel new incentive structures built around bootstrapping new pools of liquidity the real interesting factor about that in my mind is that it really changed the way that a lot of people were thinking about capital structures and incentive structures in the broader crypto landscape .Because the capital structures in these new DeFi protocols that have yield farming component built into them for liquidity contributors is very different from the capital structure of layer one where it’s like the underlying asset is what secures the protocol and the more distributed it is, the more value that protocol has because the more secure it is you know the larger the network, the more decentralized it is, all that a lot of the capital structures that we started to see with some of these DeFi protocols yield farming was really kind of an inversion of that it was sort of separation of the founding team and decentralization.
It’s more like the bigger and the faster that you can get in the more money you’re gonna make from yield farming at the same time, those protocols and their token structures can so easily be forked and tweaked and replicated and redeployed. So then I think you run into a very interesting question around how do you build a defensible DeFi protocol how do you bake in an incentive structure? that protects the protocol from these kind of vampire attacks. While at the same time preserving some kind of capital structure and incentivizing liquidity over the long term, so I think we’re going to continue to see iterations on that I mean I think that the design space here is still very new and I think that we’re going to continue to see interesting ways for people to try to incentivize this new liquidity try to aggregate pools of liquidity new ways to govern and deploy pools of capital in truly decentralized and anonymous or pseudonymous ways. The timeline probably is going to be a little bit longer than 6 months but who knows, the space is iterating really quickly and I think these are some of the clear trends for me, in a direction where a lot of these questions are still unanswered.
I was just gonna add two data points actually one to us all DeFi investors, one metric that at least we follow closely is the percentage of DeFi compasses of the entire crypto universe and to me that’s really baffling in the sense that you have the most amount of innovation the most amount of product market fit, earnings, cash flow, a number of metrics that just are leading the crypto space in general. DeFi encompasses less than 5 percent of the entire crypto market cap so for us it’s important to zoom out because a lot of people in this correction of DeFi defense point.
We saw a repricing we like to call it of DeFi assets where people sort of woke up with these protocols and like a lot of layer ones actually are usable and they’re not an entropy state there’s a lot of activity, a lot of energy and capital moving around, but still I think you know when something goes quasi-parabolic. It will cool down it’s fine these are the way markets work in market cycles, but by and large you’ve got to zoom out and say and say hey look we are still very early and I certainly can’t explain why DeFi still is less than 5 percent out of the entire crypto market.
I’ll tell you one data point when we talk a lot to TraDeFi and the beauty about finance is people don’t use your product for the sake of just because they are crypto anarchists or cyberpunks in finance the ROI is very tangible. You can see basis points by interacting with Curve or Uniswap because your capital is much more efficient using these protocols, so I think a lot of the discussions really missed the point people that are high frequency traders or come from traditional finance backgrounds really don’t understand a concept like Uniswap and they get lost in a couple of elements or they get lost and hey DeFi really can only exist in exorbitantly high yields. If you’re stuck on that you’re missing the number one point of DeFi which is the moment you unlock friction and finance has a ton of friction. You are going to unlock non-linear consumer behavior, non-linear movement of capital on a global scale. We haven’t really scratched that surface yet.
Xinshu (host):
That’s right, I think it’s both worrying and at the same time exciting to see that in DeFi is less than 5 percent, because that means that there’s a huge potential. You know I guess we are seriously talking about true DeFi not those other projects that are trying to sneak into DeFi and take on that ride, but how can we talk about DeFi and the space without talking about yield farming right. Naturally some of our conversations have already reached the point where we need to just delve a little deeper into yield farming. I think it’s a phenomenon this year with this yield farming increase everyone talks about DeFi at least and with all this yield cooling off as Santiago just mentioned. I think people started to rethink about it so I think it’s very natural but what are your overall thoughts in terms of yield farming？
Michael:
So one thing that I think Ben touched on is that tokens represent a fundamentally new design space for value accrual and value capture and a coordination mechanism that just hasn’t existed in the world yet. Something that’s digital and scarce and that’s oxymoronic before 2010. But I think the thing that we are testing now with yield farming is different mechanisms and the most efficient ways of distribution of that incentive layer that can bootstrap it, can incentivize it can build liquidity and users and engagement to the point where you have a fully-fledged fully functioning ecosystem. That, to Santiago’s point, is basis point cheaper because it has this liquidity model and because it had this incentive model in the ways that many of the protocols are built the incentive model will last for years which means that the core teams and the protocol developers have years to figure this out.
The incentive model will last forever but what we’re now seeing is for any digital ecosystem whether it’s financial related or not if it’s a purely digital ecosystem we now have a new business model for it which is some incentive layer and coordination mechanism that didn’t previously exist it’s only been around for the past 3 years probably and in earnest and what we’re now going to be testing is the different ways in which you can distribute that properly and efficiently.
Xinshu (host):
I’m actually considered I guess an atypical yield farmer because I tend to farm on these more sustainable projects I supply liquidity on Compound even before the incentive program started so they didn’t give me retrospectively. But that’s fine and even today I’m still mining on Compound because I just feel that the model there is probably more sustainable
Yes, the reaps are not the highest but I think that makes just more sense to me but I guess I’m a little atypical most of the farmers in the space are trying to go after the highest yield. I don’t know what are your thoughts on this do we have any advice in terms of people who are super excited about yield farming should they look at those more stable things that already have their token allocation for the next 3/4 years or probably that’s not the best strategy in terms of yield farming you have to keep looking for new pool every other day which is pretty tiring you know what are your thoughts on this, Ben or Santiago you have anything to share? do you guys really mine yourselves as well?
Santiago:
I guess yeah we’re active farmers for sure. I mean we as liquidity providers, we supply capital across DeFi getting tokens to your point is an added incentive now. I do appreciate a lot of people are sort of liquidity locus they sort of go from farm to farm, chasing high yields that’s right and definitely the sustainability of that is questionable. I always go back to Synthetix in my mind really kind of nailed a lot of people think liquidity mining is rather new but Synthetix really kind of pioneered this model almost 2 years ago actually now these sort of incentive schemes also exist in traditional venture. you look at companies like direct to consumer Instacart and Uber and Blue Apron and all these food delivery services. They give you money away for free and really it’s subsidized by VC dollars, which is great I mean if you’re a consumer it’s the best kind of gilded aid because you’re you can pretty much get everything for free if you just hop around from Instacart to Shopify and all these different products and so anytime you throw 100 bill in the street, someone’s going to pick it up that is clear as water so I always think to your point around Compound would you rather have a hundred avid diehard supporters?
That are going to feed you and become active community members and partake in that or would you rather have a million users come in for one day and then leave next so it really is a matter to Michael’s point around sustainability I think we are very much experimenting that I think no protocols really nailed this in the right way but I think from first principles the most important thing is no amount of financial engineering has ever solved for a crappy product. If you don’t have a good product you will not make up for it with yields. Compound is a fantastic product we’re investors in it.
It has been building over the last 2 years, Synthetix offers a really really differentiated experience and access to derivatives. So I think at the end of the day, we probably will look back at this crazy yield farming phase probably won’t be the last and look back and say look that was a good experiment to raise eyebrows and attract the attention but at the end of the day. I think the real builders continue to build and the good products that persist are the ones that over the long term end up really thriving or becoming leaders in the space so one thing I’ll add to that just to piggy back off of what Santiago said just picking up on one thing.
Michael:
I think if we look at maybe Compound versus Synthetix and they’re not comparable products, but they are similar token models where they’re distributing tokens to users of the protocols.
What we also have with this new design space is for the first time community ownership which is user ownership and what you get with these tokens ostensibly is some sort of governance rights either now or some promise of it in the future and the analogy that Santiago has is great in that VCs are funding the marketing spend for many of these direct consumer platforms.
But what they’re giving is dollars effectively and what protocols are giving is governance rights plus value whether it’s in the form of dollars. it can be translated into that at a very quick transaction but what we’ve also seen with the token economic design and this is something that I would put onto all the different protocol founders who are thinking about yield farming is when you design your token you have to be extremely careful about how you design the incentive model.87% of all COMP tokens that have been mined have been sold within three weeks; at the same time the almost reciprocal of that with Synthetix with the unlocking in May 2020 has been sold once those incentives have been unlocked and I think with that extra year with that further out point of investing in the tokens.
I think that’s a novel approach and so if you’re thinking about governance if you’re thinking about incentives really be very careful about how you design it.
Ben:
I mean the reality is there will always be a long tail of projects now that the idea of like liquidity mines or yield farming incentive structures exist out in the world. There will always be people trying to leverage them and capitalize on them and there will always be users who are willing to follow those yields. I don’t necessarily think that’s a bad thing I think like it’s true also that there will be projects that are more sustainable and that have longer-term staying power. Again, I think that like as the space continues to expand and as we start to see more complex opportunities like lending between protocols using bridges or interoperability protocols or there’s various kinds of…like lending and arbitrage opportunities.
I think we’re going to see a lot more of this and I think Michael’s exactly right that like this is a new design space and the token economy has fundamentally changed the way that these protocols can attract users and bootstrap liquidity and incentivize participation and incentivize governance participation and upgrade themselves over time . So, do I think yield farming is here to stay? To some extent yeah absolutely. I don’t think it will be the thing that everyone is talking about or chasing a year from now but I think this is another situation where you know the cat is out of the bag and you can’t get it back in.
Xinshu (host):
I like this mindset when we are looking at this. This is something very new, it’s not very straightforward to go back and look in the textbook to see how we should better have done this.
We are all exploring, I think one difference between the VC-backed model in the traditional venture space and what we have today in the DeFi space is that here we are not exactly bounded by your cash flow so for example you are not giving out people cash right?
You are giving out people tokens you have greater flexibility here in terms of how many tokens you can give to people but with that it also comes with more challenges. for example, if you give people too many tokens too quickly and this inflation may hit you back. I think this is probably going to be a process where people constantly trial and error and keep innovating and as users of DeFi, I think they are only going to benefit from all of these experiments since we touched upon this point a little bit we are thinking about how projects are funded right? Let’s say in the Uber case, it’s funded many by VCs and now I think things are changing a little bit at least in the DeFi space sometimes the projects are not necessarily funded by VCs we hear things like community launch, fair launch or… no pre-mined. Thinking from an investor perspective how do you guys see this trend?
Michael:
Investment models are going to change as well we definitely saw a lot of interest around fair launches community projects over the last three months. At Framework, we’re very large investors in YFI, we think that what they’re working on is really interesting model and they were kind of the first ones to utilize this method of distribution of their token.
Fundamentally though when you have a fair launch model you really do need to put pedal to the metal in terms of how you build an operational model to maintain it when you have a company that’s funded by traditional investors you have a lot more process and kind of where will it be able to go off and explore and build things in half time but if you have to put together a community on the fly.
A product on the fly and a user base on the fly, it’s a lot more difficult to do that and if we’re talking about things that are ripping existing software and tweaking parameters or different settings to go after a different variant the universe of opportunity. There isn’t anything that’s on chain and so anything that’s novel or new is gonna have to do it through the traditional funding mechanism. so I’m not super hot on these you know Sushiswap type variants but I am very interested in new funding methods where you can build a team and build an operational plan pretty quickly.
Santiago:
We saw this sentiment in 2017 kind of anti-VC and I always like to remind people that look as investors in a lot of these protocols we commit ourselves in a very meaningful way. I think every single funding this panel Framework, Polychain, and us we really… I mean capital is a commodity in this world and it has been for a long time where you really tried… I mean the competitive deal space in like venture funded deals in crypto is very competitive and I think… especially in this world of open source where it doesn’t take much capital to bootstrap a network and an idea and capital moves very quickly right and so a founder always has the opportunity to do a fair launch and I think it brings healthy competition because it keeps us honest and it keeps the community honest and at the end of the day for us is, what do we bring to the table?
I’ll tell you one thing that is probably not appreciated much which is we are subject to very long investing schedules and whenever we do a deal we are committed for a number of years and so candidly I think that is back to your farming construct the fair launches some of these fair launches are just disguised as ponzinomics right? Where you’re giving a token which is farmable and has no lockup and people can quickly dump it and so I think I would pose the question well what is a better model right?
There is no perfect answer that it depends on the type of network. I’d say Ben would probably say look if you’re investing in a layer one it requires intellectual firepower research. it is a much more difficult type of problem to solve than perhaps launching a competitor to Compound and forking Uniswap so I think there are different types of models that can be funded in different ways. I’m not dismissive of fair launches I can understand the criticism around some venture funded deals that have pretty terrible investing schedules and pre-mined and so I do appreciate that for sure but it really…
I think at the end of the day it is a little bit too early to call this… anything in the space really I’m not prepared to say one thing is better than the other I simply… for us is we like to back very technical teams that have one of the best questions that we ask them is what have you been doing over the last two years where it was a terrible brutal bear market and I think that’s always a good indication of true conviction for investors for founders, for builders for every anyone really into space.
Ben:
Yeah, sympathetic to folks who want a fair launch, I understand that like it’s hard to watch this space having evolved out of the original fair launch of bitcoin and seeing VC funds make many millions of dollars because they have early access to deals that the public doesn’t. I think that even as recently as sort of 2016 2017 during the ICO craze maybe you can debate whether or not those were like fair launches in the way that we’re talking about them but they certainly opened up the possibility of early stage involvement and sort of distributed the risk of those early stage investments in a much more public way. And so I certainly understand people who from sort of like an ideological perspective favor those kinds of launches at the same time, I do think that it’s worth thinking about like the teams that have had real staying power in the space and the teams that have had kind of like been able to build the best brand and build the best products. I think Compound is a fantastic example here right, Robert Leshner is a seasoned entrepreneur, he knows how to operationalize, he knows how to hire, he knows how to build a business, he knows how to build a brand and a community , but ultimately like those things take time and they take resources, right? and so I would also say that like the reality is.
Investor capital often times provides the basis on which some of the best tools or products or protocols in the space can be built so I’m sympathetic to both arguments this is another one where I think, like the reality is investors aren’t going anywhere. I touched on this a little bit earlier but I think part of what’s exciting about the broader web3 ecosystem and DeFi, in particular is that it allows for the formation of novel new types of capital structures to occur in decentralized and anonymous or pseudonymous ways such that pools of capital can be governed and allocated in an entirely new fashion, right? and I expect that we will see more of that over time, I expect that those kinds of pools will start to have more complex incentive structures and that they will start to make more complex types of investments so that may be a new avenue for founding teams to seek early stage investments. if they don’t want to go the traditional VC route, But the other thing I’ll add is that I don’t think that there’s anything wrong with founders or founding teams like selling part of the protocol in advance to fund that development and team be able to pay themselves for it right? Like these people are working very long hours, they’re solving very difficult problems and I would argue that they are bringing a massive sort of social good to the rest of us and I think that they should be able to earn a living while they’re working on that. So I don’t really have any problem funding them in advance yeah as someone with an entrepreneur background.
Xinshu (host):
I certainly agree with you, I don’t think we want a scenario let’s say a prevalent scenario where everyone makes money out of a good project other than the founding team. I think the founding team should be well compensated and encouraged to continue innovating, we are running out of time a little bit. what do you think about the adoption path going forward for let’s say DeFi applications to take on off-chain assets? From traditional financial world, trade finance traditional lending space? what do what do we see at this goes forward?
Santiago:
Michael alluded to this earlier that this is sort of the next wave that I think a lot of infrastructure has been built that we’re ready to build these bridges. We are kind of moving from dial-up to broad band internet with something like optimism.
We’re not there yet but I think there’s a lot of solutions that I think are making and are going to be making a very product-feature-complete as Michael said, DeFi and in many ways, I think combine that with macro… I mean this is a secular trend but you pair that with record low interest rates the rollout of Libra, central bank digital currencies. I mean all of this really, I think conditions the consumer to using digital currencies. And I think we’re quite excited on the consumer side, I think a lot of, a lot of applications like Argent have abstracted away the complexity and the friction points of interacting with crypto on the more traditional finance, large pools of capital. I think a lot of TraDeFi players are really interested in finding ways to interact with DeFi because they can be more capital efficient they can save basis points. and so I think we’re going to continue to see more and more of that I don’t think it will be linear in any stretch of imagination. I think these things don’t happen in linear ways primarily because you’ve removed a lot of friction that exists in traditional finance, and so one of the things that may hold us back temporarily is the lack of proper insurance which is really a fertile space.
I mean if you look at the evolution of most industries from back to whaling in New England to cross Atlantic or circumnavigating the world expeditions back in the 18th century or 17th or 15th century, you needed to have a robust insurance infrastructure in place to support these things and I think in crypto we all know what that means. You don’t have FDIC insurance but you have something analogous to that like Nexus, but I think we need more of that and I think this it will move in lockstep with more users. but look MetaMask just crossed a million monthly active users and that’s a big milestone they actually took that snapshot the day before Uniswap sort of issued their kind of retroactive tokens so I’m quite excited to see the evolution of the space. We’re gonna move very quickly and maybe next time this year we’ll be quite surprised in terms of number of users and also total value like in these protocols I think it will not… I don’t like to make predictions but I think it will be greater than perhaps even or imagine wildest dreams would say it is it’s going to be.
Michael:
Once again echoing everything Santiago said I think there’s two variables for bridging in particular real-world assets and then the next leg-up in terms of total value locked or assets in DeFi, the real-world asset bridge really comes down to trustless price feeds of non-crypto assets.
It’s something that doesn’t really exist yet that has said, some of the common commodities… but we don’t have any trustless prices feeds for equities assets. We don’t really have it for commodities yet there are some really big kind of glaring holes in how we can bridge that crypto native ecosystem for DeFi into actual traditional finance assets being traded in DeFi so that’s from a new asset category characterization standpoint but then everything else that Santiago said on insurance is what’s going to get us from 10 plus billion of total value locked to DeFi to 200 and once we have that it limits the scope… it limits the potential loss of any provider who is going to be willing to put in 100 billion dollars of stable coins and put it in a Curve and farm that and you won’t ever see a single entity coming in from traditional finance being able to do that but once you have insurance to protect it they'll be able to and once those assets are in they’re probably not going to be going anywhere so I do truly think that insurance is what gets us from 10 to 100.
Ben:
I certainly agree that those are two necessary elements, especially the insurance component.
I actually think that there are two really significant challenges here the first is sort of purely technical and infrastructure which is to say that I don’t think this is particularly a novel insight but the reality of DeFi right now is that is in equal parts enabled and hindered by Ethereum’s technical limitations I think there’s a long way to go in terms of scalability and interoperability before we can have a genuinely seamless experience of trading the kind of volume of assets that we’re talking about.
So, that’s one major hurdle. Obviously, there’s a lot of really brilliant people working on it and we will get there the question is more a matter of time the second is with respect to bringing real world assets on chain. I think there are challenges with respect to tokenization and settlement that I haven’t heard compelling answers for yet and that more often than not, rely on the bridges between the decentralized financial world and the traditional financial world being themselves these kind of centralized trusted bridges and that may be a compromise that we are willing to make in the short termbut there are still challenges around the settlement of the sale of tokenized assets for example that I think are very difficult.
Xinshu (host):
Okay, thanks to the guests for their wonderful sharing. Today’s Panel is here. I look forward to more exchanges and cooperation with you in the future. Thank you everyone!
🦄 About IOSG
Founded in 2017, IOSG Ventures is research and community-driven with offices across China, US, Singapore and Germany. We focus on Open Finance, Web3.0 and cross-chain ecosystems, investing in teams with top potential worldwide. Our portfolio covers more than 60 projects, including Layer-1 blockchains (Near, Polkadot, Cosmos), middleware (Celer, Raiden, Reach) and applications including Defi (MakerDAO, Synthetix, UMA). We have been actively involved in various developer & DAO communities. We believe in long-term partnership and we work closely with our portfolios to advise and support them along their journey of entrepreneurship.
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