Technology Lawyer working on code and everything law. Founder : Blockchain Research
We want to become the Robinhood of financial products, letting any regular person to experiment with our protocol or try to find profitable opportunities. One of the use cases would be a financial platform-oriented at mainstream users, that we are going to launch on top of dfinance.
1. Welcome to our “Behind the Startup” series Boris, it’s nice to have you here. Please, tell us about your story and your journey into the blockchain industry?
Thank you for having me Ishan. My initial interest in cryptocurrencies began in 2013 when I first learned about Bitcoin and suddenly realized the technology’s potential. At the time, I worked as a Node.JS developer, so I became interested in understanding how blockchain technologies work under the hood. Unlike today, there were no books or tutorials that cover the technical parts of blockchain protocols.
Following the completion of the Crypti roadmap, the team split into three - Lisk, Ark, and my second project, WINGS. WINGS was born following the emergence of the ICO-mania, which was fueled by the astonishing success of Ethereum. As low-quality projects and outright scams started to appear, and projects started placing significant emphasis on community sentiment, an opportunity to add value to the ecosystem was created.
WINGS brought some order to the ICO chaos and enabled crowd-based evaluation forecasts, fundraising promotion, and early adopter engagement for projects. The market was enthusiastic about the idea, with over 50 ICO projects choosing to trust WINGS DAO and the audience for the evaluation of their project. Between 2016-2018, over 12 million USD equivalent were distributed by projects to the WINGS community as forecast rewards, while the performance of the WINGS token peaked at over 100x. Unfortunately, the ICO phenomenon diminished just as fast as it emerged, reducing the value of the WINGS platform.
It was a hard time for the entire DLT field. However, we managed to stay afloat and focused on a new exciting DeFi direction. Currently, our development efforts are focused on - Dfinance, a DeFi protocol that facilitates the creation of financial instruments without requiring prior technical background.
Working on blockchain protocols was one of the most important decisions in my life. It’s a huge potential industry that is always moving forward, always innovating. I think that the Blockchain industry today is similar to the internet industry in the 1990s - there’s still a lot to work on and improve, but the inevitable outcome will completely change the world as we know it.
Well, considering the first global pandemic in the last 100 hundred, wild inflation rates, and 0% interest rates, I think it’s safe to say that we are entering an exciting stage. In my opinion, the future of finance and fiat currencies will undoubtedly see a global switch to or integration of blockchain technologies. The innovation blockchain brings to the conservative financial industry is immense, and this opportunity should undoubtedly be used to experiment, build, and try new financial instruments and ideas.
Before the emergence of DeFi, a regular person could not even dream about creating new financial products, like futures, options, structured notes. First of all, you needed to have financial education and to be licensed as a trader or even a broker; then, you would need to somehow convince a financial market, like a bank or investment fund, to accept your instrument and finally you had to arrange appropriate liquidity for that instrument.
Now, thanks to decentralized technologies, we see new financial products coming to the industry, such as Maker DAO which enables collateralized loans, Synthetix for synthetic assets, dxdy that enables leveraged trading and futures, and of course Dfinance. We believe that this new trend of decentralized financial products, solutions, and instruments will only keep growing.
Personally, I don’t believe that cryptocurrencies will replace fiat currencies. I think we will see governments and big companies adopting their own analogs. Just look at Facebook’s Libra, how it was launched, and what regulations forced it to become.
I expect to see state-regulated stable coins launched in the future, and while I can’t say if that is going to be a good or bad development, it will definitely open the industry to mainstream users, which no matter how you look at it, is essentially a great thing to have.
Dfinance is a new cross-blockchain DeFi protocol. It will enable users, especially those who do not possess software development education or skill sets, to design and launch new financial instruments and even make them liquid on our platform DEX. We want to become the Robinhood of financial products, letting any regular person to experiment with our protocol or try to find profitable opportunities.
One of the use cases would be a financial platform-oriented at mainstream users, that we are going to launch on top of dfinance. Imagine, for example, that you will be able to create new futures or options for wearables markets (such as Sneakers) and allow people to trade or speculate on their mobile phones.
We have already reached a major milestone, by having launched the first public version of our testnet in April, and are currently on our way towards a full PoS network launch. During our research stages, we recognized the enormous potential in using Facebook’s Libra, and we put significant resources into the adoption of the technology.
Today, we are excited to be the first team that managed to connect between the versatility of the Cosmos SDK and the power of Libra’s Move VM. Dfinance is one of the first projects in the Cosmos ecosystem that already supports smart contracts.
Our target audiences are both creators and developers, and
we aim to provide each with a different toolset. The creators will get an easy to use, a textual interface that will enable them to basically type their ideas into real-life instruments which can be deployed on dfinance. The interface might even provide a click and drop capabilities, further simplifying the instrument creation.
While the goal is to keep it fairly basic, the resulting instruments will still enable exploring the proof of concepts and how they can be utilized in the building of new products.
Developers, on the other hand, will have a set of well planned and documented tools that will enable them to fine-tune their instruments for particular situations, potentially making them more responsive to market conditions thus resulting in more advanced instruments.
Thus, creators and developers will be able to create passive income streams in case of their instruments becoming popular and used by traders, which should be the case if the instruments are solving real problems and are creating value.
The idea behind this split is to enable new talent from the mainstream industry to join the decentralization revolution. Often, our space is being criticized for being closed to the rest of the world, due to perceived excess of technicality or the history of scams and hacks. This perception has to change, otherwise, we will always be considered a fringe industry. Thus,
with dfinance enabling all levels of people to get in, we hope to create a
a platform that will be suitable for various levels of talent onboarding.
We are also aiming for RobinHood-like experience for traders, with the
aspiration to make things as similar and as simple as possible. One way to
achieve that is to enable instrument access through a mobile app tailored for the needs of modern retail traders that want instant access to instruments that are in their area of interest.
We learned a lot of lessons from our previous projects and from other projects in the industry, and we understand how vital it is to have a good governance system as one of the requirements to really achieve decentralization. Currently, we plan to use the Cosmos Hub governance system.
Having said that, we are currently researching our own kind of governance model, which will improve upon the shortcomings of the original system, including the ability to get more accurate results with a lower number of participants.
Another area we are working on is ways to allow developers of instruments to publish them for community review, and pending the proposed instruments upvote and approval, the system will add them to a public whitelist. This will indicate to the public of traders that these instruments are considered safe to use by the community.
Lastly, we are also researching emergency mechanisms that automatically resolve critical situations (in case of bugs, hacks, or attacks), which will result in a safer, more robust protocol.
Parties looking to participate in governance will have to hold the DFI coins and vote with their weight on new proposals, essentially approving or declining them.
This is a great question, especially as we plan to establish a self-sustaining ecosystem. First of all, dfinance will be launched under the existing Wings Stiftung non-profit foundation. Due to careful capital management, we retained enough resources, which allowed us to develop dfinance without the need for additional funding.
WINGS DAO will continue to exist and is planned to become a complementary system to dfinance, which will enable transparent public review of instruments. As part of that, a token swap mechanism will be launched, and the new platform will feature an inflation model that will reward those that secure the protocol and ensure that dfinance will continue to be developed and maintained for the long term by the community and by Wings Stiftung. More details on the swap and inflation mechanisms will be made public at a later stage.
The tools that will enable the interaction with the protocol, as well as the
mobile application for retail traders, will be launched under the for-profit,
which will be seeded by selected venture partners. This structure enables the for-profit company to support the ecosystem with ongoing development while focusing most of its resources on attracting real end-users and creates an income stream for Wings Stiftung which leads the infrastructure research and development.
By focusing on the mainstream, the for-profit will serve as an adoption driver, bringing more users to use the platform, while hiding from them the complexities of the underlying protocol and technologies.
7. A lot of defi projects are getting hacked or compromised recently. How would Dfinance maintain its network security and integrity, so chances of hacking are minimal?
Security is paramount to any DeFi protocol, especially in light of the latest hacks and attacks. We have accumulated extensive experience and have applied these lessons when designing and working on dfinance. The team always takes a “skeptical security” approach and continuously tries to think about how hackers would try to attack the system.
Obviously the platform is open to white-hat penetration testing, which lets professional, ethical hackers attempt to spot and report any potential vulnerabilities.
Next, we always use multiple security audit companies that analyze our code, try to attack it from different angles, and produce reports about any potential issues. Also, as I mentioned before, we are researching a security mechanism that will provide measures for emergency stops or even block specific smart contracts in case the situation requires so.
The last and probably one of the most critical points is that we have decided from the onset to integrate and put Facebook’s Move language and the virtual machine as a cornerstone of dfinance.
After working on it for the last 12 months, I can say with certainty that it’s the most secure smart contract environment on the market today, primarily due to its innovative security model which is based on resource orientation and formal verification principles.
This prevents the occurrence of most common hacks and bugs by design, like for example, the infamous reentrancy issue. As part of our educational efforts, we have recently published a blog post explaining why reentrance is simply not possible with Dfinance. Lastly, the formal verification capabilities of move allow the developer to ensure that smart contracts behave only as they were expected, rooting out any unexpected behaviour.
By the way, also as part of our educational campaigns, we have recently published the first-ever Move Book for beginners, where we explain how a developer unfamiliar with Move can start developing on the Libra’s Move, and by extension, on the dfinance platform.
I believe that regulators are carefully looking at DeFi markets and are not going to allow the same “wild west” situation we had with ICO’s in 2017-2018, which caused significant losses to many. Having said that, I think they will give some lean away to this nascent industry, allowing to establish proper self-governance rules and ethics, before bringing their own, often heavy-handed methods.
We are carefully monitoring the situation, and will closely follow the recommendations of our legal advisors, in order to make sure dfinance can freely operate globally, in compliance with local regulations.
We set from the start to become a fully decentralized entity, with the absolute majority of our workforce operating remotely, so we were lucky to avoid a good part of the negative impact COVID19 had on many other companies and industries.
Having said that, the isolation was undoubtedly difficult, as creativity sometimes requires us to step outside our homes and recharge, which was not possible during the strict restrictions we had. I am thankful that none of our team members has contracted the sickness and is ready to support any of them if such an unfortunate event occurs.
I am also happy to see that the blockchain industry, in general, seems more resilient to such significant disruptions. Despite COVID, I still see a lot of deals still being made, investments flowing and plenty of newly launched projects, including in the DeFi space.
I believe the current situation will boost our chances of success due to the high amount of interest we are witnessing today in investing and trading. We see that RobinHood and other retail applications enjoy good user growth, users that are looking to try and improve their financials while at home. I think that by focusing on making the onboarding as seamless and comfortable as possible, and of course by providing real solutions to real problems, some of this success and interest will reach dfinance platform as well.
I believe that cross-connectivity will grow in effect, with traders expecting to be able to operate using a number of assets from different platforms. Interledgers such as Cosmos will become increasingly popular, and we
are proud to be at the forefront of that trend by providing new tools and
opportunities for the Cosmos ecosystem.
While security will be paramount, I think that, unfortunately, we will witness more bugs and hacks, mainly due to the nature of rapid experimentation and rushing to launch tools to market. With Libra’s Move
full integration, we hope to become one of the prominent examples of how
innovative technology can avoid these issues, while still shorting the time to market.
Last but not least, we are probably going to see the first signs of regulatory supervision; here we will be looking to continuously cooperate with other projects in establishing proper self-governance guidelines, in order to stay compliant with the regulatory requirements and to provide a safe experience to our users.
The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The views in these articles are purely personal and educational; the material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Interviewer - Ishan Pandey, Founder of Blockchain Research.