NEST Roundtable 8：How does DeFi vs TradFi? Will XEN be the future?
Participants:
Iris: BD Manager of BSC Zone
Bibox: COO of Bibox
John Tan: CEO of Alchemy Pay
Woody: Head of Marketing of NEST
Caroline Lu: Community Initiator of MsmetaHK
Pear Fire: Operations Manager of PearDAO
Conference recording：https://twitter.com/NEST_Protocol/status/1581993241041215489
Would you please introduce yourself and your project?
John: Alchemy Pay is a financial and Coinbase listed crypto project that was first established in 2018. Our mission is to reach the fiat and crypto global economies. We offer crypto payment system which basically enables any businesses around the world to accept a wide variety of on-chain crypto payments as well as centralized exchange payment methods. And then we settle the money to our merchants in their own local currency. We also allow users to buy and sell cryptos directly.
Caroline: MsmetaHK is a Hong Kong based metaverse project that applies top-notch blockchain technology to create a digital twin city of Hong Kong in the Metaverse based on its photographical features as well as its thriving and diverse culture and booming economy. It’s not just a metaverse of digital Hong Kong, but prosperous ecosystem combining did NFT and GameFi offering users a profound experience of interacting and play-to-earn seamless assets trading etc.
Iris: BSC Zone is a channel updating daily news and features BSC projects.
Woody: NEST Protocol is Web3 infrastructure. Basically, we provide assets to all the project teams and with our probabilistic virtual machine. On-chain platforms and on-chain projects can easily generate asset by simply calling our PVM functions. It is a simple and secure way for projects to generate asset on-chain. The asset can be any risk-return assets, like the bond, options, futures, GameFi, Treasure box and even lottery.
Fire: PearDAO is a non-custodial marketplace governed by DAO. We mainly have three products: the P2P marketplace, NFT marketplace, and GameFi in 2 weeks later.
Does DeFi really solve the problems traditional finance cannot solve? What’s the benefits of DeFi?
John: Traditional finance covers a huge spectrum of verticals such as banking, payments loans or even security investment which all have their own inefficiencies. These inefficiencies often can stem from the same fundamental issues that arise due to the centralized nature of traditional financial institutions that offer these services. I think that traditional finance would never face out and in fact will coexist with DeFi, so existing financial institutions will continue to enhance themselves by employing solutions such as open banking.
Iris: Currently both DeFi and Traditional Finance play important roles in life, however one thing is clear that they’ve defined steadily resolves the flaws of traditional finance. DeFi eliminates the role of middleman or intermediary in the finance world like banks, funds, governments. And the third is the limited access. DeFi allows people to do transactions and lending, borrowing, savings without complex procedures and papers. DeFi is cheap fast secure transparent and anonymous.
Caroline: DeFi is an emerging financial technology that combines the power of blockchain digital access and financial services and eliminating the role of middleman. One thing is clear that the need for an open, transparent, and secure system is the fundamental driver in this whole public debate between traditional banking of DeFi. Also, data security becomes a rising concern when it comes to financial system. Last, the use of the open-source code and developer tool.
Woody: DeFi needs consensus, but in the real world, there’s no need for a general consensus in that way. So TradFi would still exists in some small scenarios like payments. But the DeFi is the new way to generate new assets.
XEN Crypto is popular recently, what do you think of this project?
John: When it comes to evaluating projects, I generally look at the utilities or the problems that they’re trying to solve and then with that try to figure out whether that’s going to be demand for their services in the long run. It seems like XEN Crypto was created to a little bit silly that anybody can mint. Ironically, I think it was probably because of this reason that they got really popular. So, unless their team can tie utilities with the real-world value for their token, I personally am not entirely sure about where this project is going to be in.
Iris: It’s a very new project and I think it is quite unique because it is run on the POP mechanism. This project also has some reputation before it was launched because of its founder.
Caroline: I’ve learned that XEN crypto is a token that you can mint for free, and you only need to pay the Ethereum transaction fee, no premium, starts from zero supply. And I think that it was really something that stands out amid the crypto bearish market downturn.
And the strategy XEN took for its go to market move is clear that it utilizes various blockchain ecosystem including BNB chain, Polygon. But it’s exactly the reason why I think its token price jumps so hard, as more and more tokens are supplied via its mechanism. So I don’t think this mode is sustainable for continuous user acquisition, but I do believe that the product and profit are keys to continuous development of a protocol.
How will DeFi contribute to metaverse?
John: So fundamentally, the metaverse, whether is it decentralized or centralized, there’s just a huge virtual marketplace where the key participants are the service providers as well as consumers. But the major difference here is that the centralized one has an operator that has a power to restrict the freedom of the participants whether is it the consumers or the service providers. So, in my opinion by far the biggest role that DeFi plays on the topic of metaverse is really the value transfer between the participants, like NFT purchase.
Iris: The metaverse, I think, needs several components to be brought into reality, like NFTs. So, it will require a trustless financial system to function and so that is way DeFi comes. When people join metaverse, they need to hold the currencies, they need to have transactions. That’s why DeFi is an important contributor to metaverse.
Caroline: First, and also the most important thing that DeFi can do is to bootstrap the excess liquidity including FT and NFTs in various material systems. Liquidity is essential for metaverse ecosystems to really push for continuous user growth while empowering the asset with more values. Secondly, metaverse requires access to be authenticated while protecting users’ data and access security. So DeFi is the necessary infrastructure to ensure this. Last but not least, the metaverse need several components to be brought into reality.
Fire: DeFi is kind of like a crypto decentralized core structure for the metaverse. I cannot imagine a metaverse without the DeFi as the infrastructure. And DeFi is like a traffic and channel to make people feel more inclusive about each other.
When do you think metaverse will come? And at that time, what DeFi will be and what TradFi will be?
John: The more meaningful question is when we will see a metaverse that the mainstream audiences will be interested in participating in and I do feel that we are still in the early stages of building the blockchain infrastructure to support this role that might see adoption in the future. DeFi and TradFi will work together to make a blockchain metaverse more easily accessible.
Iris: I suppose metaverse still need 10 years or longer to become popular. Currently DeFi is spreading in a very large sculpture to the world, but metaverse still need time. Therefore, the DeFi is important as infrastructure. Traditional Finance might still exist, but it’s scope will become smaller. It still has a certain role because we are still under control of the governments, and we still live in daily life.
Caroline: Metaverse will offer users a more immersive experience as technology evolves. So we will be witnessing a exponential growth of user into metaverse in the future and there is no doubt that this train will be realized in the next two years. DeFi and TradFi will grow more mature in nature and become the essential infrastructure that shifts the way people will interact with in metaverse and the way they circulate.
Fire: In the next coming two or three years before the next bull market, the metaverse will come and GameFi would be the channel. DeFi would be more popular but it’s still like the small market compared to the traditional finance, and the traditional finance will still be the domination for the market. But for sure the trend is more and more people will choose the DeFi rather than the traditional finance.
Woody: I am also positive for the metaverse, and I think it will come in in the short future, not be that 10 years, that’s long.
Q&A session
One of the main problems with smart contracts today is that there is a very high risk of bugs that allow hackers to steal the funds and incur significant losses for project and its users. Can you tell us about the solutions that you offer to prevent this?
John: Alchemy Pay doesn’t include the use of smart contracts. We simply process transactions on the blockchain, and then we settle it via the traditional financial channels. I don’t think that eventually, DeFi or crypto services will get rid of the regulated financial institutions entirely. A big part of that reason is due to regulations. There’s a lot more work that needs to be done by the audit companies to audit the smart contract.
What is your point of view about the future of DeFi and TradFi trend in the 2023?
Iris: For traditional finance, it would be the combination of FinTech, like the digital changes in payments, or focus more on the personalization of the users using big data and AI in executions. For DeFi, in lending protocol, although it is not very popular right now, it will be good in next year as people in reality want to earn more interest.
Can you tell the roadmap of MsmetaHK for NFTs in next 2 quarters as it has relatively small community?
Caroline: First we will open the NFT marketplace for NFT projects to list their NFT and the user can trade on our platform. Secondly, we will enable NFT access to circulate as avatars, items, characters, badges etc. in our metaverse with value empowered by our ecosystem. Thirdly, we will be working with our close partners and to bring more and more values to our users.
Tell us the role/importance of DeFi/TradFi on PearDAO project?
Fire: I’m going to talk a little bit about the unique part of PearDAO because we are the first one to launch the NFT marketplace that you can not only use the cryptocurrency, but also the traditional fiat currency to buy and sell NFTs. So, we are a good example to make the web2 and web3 get married, and both DeFi and TradFi are acceptable in PearDAO. We are here just to bring more users from traditional web2 to web3 world by offering them all kinds of solutions for the payments.
Why XEN is being called the crypto with the lowest barrier to entry compared to the rest of the coins on the market today?
Woody: It is called the lowest barrier to entry because it’s free mint and its use proof of participant. You just need the address and gas fee to mint. But it cannot be the lowest barrier to entry for a crypto project because I do believe there are a lot of small contracts that can also be free minted. The value goes to XEN is because it has the game theory behind it. They believe the token can become deflationary and more valuable. It might be a good idea, but we need to see that how the project goes.
In the end
It is a great discussion on How does DeFi vs TradFi? Will XEN be the future，we will have our 9th NEST Roundtable (Twitter Space) on Oct 24th, Please follow our twitter feeds and don’t miss out.
