Moonshot Mafia #24 | Revolutionize Financial Infrastructure, HashKey Capital Portfolio Demo Day 2023

Recap of Moonshot Commons’ Web3 Fireside Chat at 2023 HashKey Portfolio Demo Day IV

At Moonshot Commons’ Web3 Fireside Chat #24, HashKey Demo Day IV, we invited speakers from financial infrastructure portfolio companies:

BlockMia, Head of Marketing at Mystiko Network; Tony Sun, Co-founder and COO at Range Protocol; Umi Miyahara, Lead of Business Development at Breez; Henry Zhang, Founder and CEO at DigiFT; Bayo, Head of Engineering at Mento Labs; Chris, Core Contributor at StakeStone; Yang, Co-Funder at Fiat24; Huncho, Co-Founder & CTO at Canza; Michael Nowotny, Co-founder and CEO at Krypton Labs.

HashKey Portfolio Demo Day is a showcase platform created by HashKey Capital for its portfolio of invested projects. It aims to help these projects connect with potential investors and partners within the ecosystem.

HashKey Capital is a leading institutional asset manager focused on blockchain technology and digital assets since 2015. HashKey has a strong track record of investing in high-growth companies globally, with expertise in blockchain technologies. This vision and commitment ensure that it stands at the center of the blockchain ecosystem in Asia and globally. HashKey Capital’s portfolio covers a wide range of the blockchain ecosystem, including public chains, protocols, and applications across the globe. The team combines technological and financial market expertise, specializing in digital asset investment for institutional investors. (Visit HashKey Capital for more information)

Source: HashKey Capital

Mystiko Network is a multichain privacy and connectivity infrastructure via PaaS (Privacy as a SDK). Leveraging zero-knowledge proof with industry-leading “zk of zk” technology, Mystiko Network guarantees interoperability, scalability, and privacy, all at once.

Range Protocol is a comprehensive asset management platform. They link DeFi users with professional money managers, who use advanced quantitative models to analyze historical data, creating non-custodial vaults for various assets and risk tolerances.

Breez enables developers to integrate Lightning and Bitcoin payments into their apps with zero learning curve or technical expertise.

DigiFT is the first regulated exchange for on-chain real-world assets, approved as a recognized market operator with a capital market services license by the Monetary Authority of Singapore. DiGiFT allows asset owners to issue blockchain-based security tokens and investors can trade with continuous liquidity via an AMM (Automated Market Maker).

Mento Labs is a platform that allows users to launch and operate useful stablecoin.

StakeStone is the yield-bearing ETH with a decentralized yield-optimizing service and the most accessible LST (Liquid Staking Token) ready for mass adoption on Layer 2.

Fiat24 is a Swiss Web 3 Bank. They offer cash accounts and payment services to clients, leveraging blockchain technology as a new means in which to book client ledgers, a pioneering way to replace outdated legacy systems and radically improve such core aspects as human error, manipulation, efficiency and manpower.

Canza is an African Web3 Forex Investment Bank. By focusing on cross-border settlement and treasury management, Canza is looking to solve some of the biggest challenges facing Nigerian enterprises that do business internationally.

Krypton Labs is the world’s first DEX that makes trading cheaper than TradFi. From software development to smart contracts and decentralized apps, their experts deliver cutting-edge solutions that drive growth and solve real-world challenges.

Source: Moonshot Commons

Key Takeaways:

1. The shift to non-custodial cryptocurrency solutions reduces compliance burdens for crypto businesses amidst evolving regulatory landscapes.

2. The Web3 financial sector focuses on dealing with regulatory complexities and deploying more innovative solutions to address challenges such as money laundering and integrating auditable transaction features.

3. The emphasis on interoperability in DeFi and CeFi, through advanced smart contract design and cross-chain compatibility, streamlines asset integration and liquidity management across blockchain networks.

4. DeFi projects are advancing through cost reduction, user experience enhancement, mainstreaming Bitcoin, and developing privacy infrastructure aligned with the ongoing compliance-related changes.

5. DeFi market is poised for short-term growth through innovation and user experience improvements, with medium-term stability from clear regulations, advanced instruments, and technological enhancements.

Moonshot Commons:

Could you please introduce yourself and give an overview of the project you’re currently building?

BlockMia:

I’m very happy to be here and share our thoughts and exchange ideas. Mystiko Network is a multichain privacy SDK (Software Development Kit) for DeFi and we’re using ZK (Zero Knowledge) technology to ensure privacy and interoperability to help developers and users get their transaction privacy on the chain.

Currently, we are supporting different chains such as Ethereum, Binance, Polygon, and Avalanche. partnered with the BASE network as well. All developers on this chain will be able to integrate the Mystiko network as the privacy arm.

We are working closely with different bridges such as Celer Network so that in the future, you can see that we also will be able to ensure users enjoy multichain and cross-chain privacy. Other than that, compliance is a key feature of decentralized finance. To balance compliance and privacy, Mystiko also has an innovative feature called auditable to protect privacy.

To ensure the general good, we aim to eliminate any potential for bad actors during critical phases. That’s what we’ve been doing and very excited to learn more about it.

Source: Mystiko Network

Tony Sun:

I’m the co-founder and COO of Range Protocol. Previously I was the co-founder of Altonomy, and I joined crypto in early 2018. Then the business was acquired by blockchain. com.

This year, we launched Range Protocol to create a universal platform for on-chain asset management. It’s a gateway where investors and users can access systematic strategies, all managed by professionals in a fully non-custodial and trustless way.

We launched six months ago, covering various DeFi asset classes including Spot/AMM, Liquid Staking, Derivatives, RWA, and Borrowing & Lending. So far, we’ve achieved a Total Value Locked (TVL) of 25 million. Our platform continues to evolve, encompassing more features like borrowing, lending, and on-chain derivatives trading.

Source: Range Protocol

Henry Zhang:

This is Henry Zhang from DigiFT. I’m the founder and CEO of DigiFT. DigiFT is a marketplace. It is an exchange for digital assets. We are the first regulated exchange for on-chain real-world assets and digital assets. The licenses are from the Monetary Authority of Singapore. We have two licenses called the Capital Market Services and Recognized Market Operator. These two licenses allowed us to do both the primary market issuance, redemption, and distribution, alongside secondary market trading. We settle trades on Ethereum using a lot of DeFi applications for auto-matching.

Source: DigiFT

Bayo:

I’m Bayo, and I lead the engineering team at Mento Labs, a digital asset solutions company. We’re currently developing the Mento platform, a permissionless and decentralized Web3 platform that enables the issuance and operation of transparent digital assets.

Our platform is actively used globally, featuring assets like the USD, Euro, and, most recently, a West African Franc-based stablecoin. We specialize in creating tools that support the issuance of stablecoins, as well as features to secure these stablecoins launched on our platform.

Recently, we introduced an automated on-chain circuit breaker and implemented trading limits to prevent the draining of the protocol. Additionally, our stablecoins are backed by a diversified portfolio of crypto assets.

Source: Mento Labs

Chris:

I’m Chris, a co-contributor at StakeStone, an omni-chain liquidity distribution network.

We bring native staking yields and liquidity to Layer 2 and other Ethereum chains in a decentralized manner. StakeStone also innovates in decentralized stacking, ensuring transparency and optimized yields for STONE holders. Notably, STONE is developer-friendly, facilitating easy integration across multichain protocols.

So far, we’ve launched the ‘Yield Bearing Layer 2’ campaign in collaboration with Manta Network, aiming to develop a live Layer 2 solution with native yields. Impressively, we’ve achieved $30 million in liquidity in just the past three days

Source: StakeStone

Huncho:

I co-founded Canza Finance, where we’re developing a Web3 Neobank. Starting as an African OTC focused on digital assets, FX, and cross-border settlements, we’re now expanding to provide B2B solutions for on-ground challenges.

We also created on-chain products for the continent of Africa and emerging markets. We started building DeFi financial infrastructure and innovating stablecoins with a focus on-chain FX. Our flagship DeFi product is Baki, which is an internet liquidity exchange for African currencies.

Source: Canza Finance

Michael Nowotny:

I’m Michael Nowotny, the co-founder and CEO of Krypton. My journey began in academia, where I trained as an economist and earned my Ph.D. at UCLA. I spent some time as a math finance professor at Boston University. Currently, I’m addressing longstanding challenges in crypto and Web3, particularly the exorbitant costs of trading. We’re applying academic insights to the finance industry and DeFi to build a decentralized exchange that operates uniquely.

Our platform aims to revolutionize crypto trading, which allows traders to retain their hard-earned gains, free from the hidden costs often seen in traditional finance such as adverse selection. We’re tackling these issues at their core, striving to create a fairer, more transparent DeFi system.

I believe our upcoming decentralized exchange, Krypton, set to launch next year, will revolutionize DeFi trading by being more cost-effective and efficient than traditional finance (TradFi) or centralized finance (CeFi). We’re addressing long-standing financial challenges comprehensively for the first time, and we want to set the stage to move confidently into the future. I’m grateful for the support from HashKey Capital and others. We’re excited to showcase a demo next Tuesday and give everyone a glimpse into what we envision for the future of crypto trading.

Source: Krypton

Umi Miyahara:

My name is Umi Miyahara. I lead business development at Breez. Breez has been around for the past five and a half years already. We’re a company working in the Bitcoin lightning ecosystem as a lightning service provider. We started early with the inception of the lightning network back in early 2018.

At the core of our company, we believe in Bitcoin as a currency and we want to bring Bitcoin to the masses. We’re thinking that the right way of bringing Bitcoin to the masses is by providing everyone easy access to the lightning network. We also crucially want this access to be non-custodial. We want all our users to maintain their sovereignty while interacting with the lightning network.

Our lightning service operates on two fronts. Firstly, it enables users to develop interfaces that facilitate peer-to-peer (P2P) payments powered by Bitcoin. We do so by offering our Breez SDK. It allows any app to enable lightning payments easily and simply, taking away the complexity of lightning.

Source: Breez

You don’t have to be a lightning expert to enable lightning payments through your app or service, and we have an open LSP (Lightning Services Providers) model where we allow any third party to become a third-party LSP in our network and plug in their liquidity and be in the LSP allows you to hold the coin treasury and earn an ROI without relinquishing custody.

We’re here to bring Bitcoin to the world to the masses through the lightning network through our services and are excited to share our journey and anything else in terms of questions that people have.

Moonshot Commons:

Considering the recent Binance case, how do you see regulations in the finance sector evolve? What measures are your project implementing to adapt to these changes?

Umi Miyahara:

There are various views in terms of regulations that are shifting in this space for us. I just mentioned before a key point about our service and what’s crucial to our values and the innate values that Bitcoin has is non-custodial access and non-custodial holdings of your currency, which is Bitcoin.

We are offering non-custodial access to Bitcoin to end users through the lightning network and by being non-custodial, it’s not. The regulations don’t have that much impact on us. It matters in terms of when you’re offering a custodial solution where you must follow the regulations and they do impact your business. But because we’re focused on non-custodial, it doesn’t affect us. It makes our service that much more valuable and important. So, what we’ve seen is several custodial options that are out there in the lightning network space that must pull out of certain markets.

We’ve seen that most recently, a lot of Satoshi, who is a big custodial player in lightning, must pull out of the U. S. market post the Binance case. We’re seeing a lot of people shifting to non-custodial and it’s becoming more and more important. For our project, we’re here to support the growth, importance, and value of non-custodial access to your coins.

Source: Aleph Publications

Henry Zhang:

First, if we apply blockchain and blockchain-based technologies to assets that are essentially applied to the financial markets. Now we should be aware of the financial market itself. It is in a heavily regulated industry no matter what technology to use. On one hand, people like me, who firmly believe in the value. The implication of this new technology applied to the financial markets can create a lot of true value. But on the other hand, since it has true values, it will be used more and more.

The recent Binance case underscores the unavoidable importance of regulatory compliance in our field. It’s a reminder that collaboration with regulators is essential, rather than ignoring their role. In the crypto world, centralized and decentralized technologies aren’t opposites but complement each other. For instance, at our platform, while we leverage heavily decentralized technology such as P2P settlement, non-custodial assets, and AMMs, we also integrate necessary centralized technologies to enhance our exchange’s functionality.

We’re applying our technology not only to digital assets but also to mainstream financial assets, which are substantial and in need of modernization. Considering this, it’s evident that the crypto and digital ecosystem is still in its nascent stages of growth.

A key focus is on sustainable and healthy protection for investors, operators, and shareholders, which involves understanding and complying with regulations. It’s crucial to work towards being accepted by regulators and to encourage them to evolve and embrace innovation. While we’re ambitious in embracing valuable assets, working within a regulatory framework presents its challenges.

Source: Reuters

BlockMia:

The regulatory focus on Binance highlights the need for both centralized and decentralized finance entities to adhere to compliance requirements while growing in the industry.

This situation presents a dual perspective: on one hand, it brings uncertainty as major players face regulation; on the other, it offers clarity through well-defined regulatory guidelines for crypto operations. For example, regulations might restrict certain crypto activities, but compliance can be achieved by operating correctly for the right audience. This scenario outlines a clear growth path for projects, including the need to balance operations with compliance.

A key concern, highlighted by the Binance case and actions against privacy-focused projects like coin mixers, is the issue of money laundering. This serves as a guideline for decentralized projects to discern appropriate privacy levels and ensure services cater to legitimate users while incorporating more compliance features.

We at Mystiko hold the belief that privacy is essential for all Web3 participants and aim to provide a solution that is not only sustainable and compliant but also enduring. Following the cash incident last year, we’ve incorporated an innovative feature known as auditable Zero-Knowledge (ZK) into our technical design.

Mystiko “AuditableZK” Account Management, Source: Mystiko Network

This feature guarantees private transactions when needed, yet allows for specific processes in certain cases, like if there’s substantial evidence of money laundering by a user. In such scenarios, we can balance user privacy demands while preventing illicit activities on our platform. Additionally, we’re enhancing our blacklist mechanisms and collaborating with auditing firms and communities to ensure all Mystiko users are legitimate.

The challenges and compliance landscape highlighted by the Binance case suggest that adapting to regulatory changes can unlock new opportunities, fostering a healthier and more compliant environment for growth and better wealth management. This approach reflects Mystiko’s commitment to compliance and sustainable development in the crypto space.

Moonshot Commons:

How is your platform ensuring interoperability with other DeFi and CeFi projects as well as various blockchain networks?

Bayo:

That’s an interesting question and it’s something that we take very seriously. We do this at multiple levels. At the lowest level, the design of the smart contracts of the protocol. We ensure that the contracts providing the main functionality have clear logical separation, and this makes it easier for third parties (other DeFi protocols or other users) to integrate with them.

As an example, we’ve recently had a squid router integrated with our protocol to allow cross-chain swaps of the stable tokens that are issued on our platforms. At a higher level, we also offer SDKs which are properly documented to allow easier integration.

But on top of that, we have issuers who are using our platform to issue stablecoins. We want to help them support their users by making it easier for them to get in and out of these stablecoins that we’re issuing. One of the projects we’re currently working on right now is a tool that makes it easier for these issuers to offer on and off-rent services to the users of our stablecoins.

Source: MATE

We’re building a tool called MATE that allows the issuers who are using the protocol to define certain flows. For example, if they want to buy some USD on USDC on an exchange and then drop that on a specific chain, and then convert that to a stablecoin that they’ve issued on our platform.

This tool simplifies the process by combining multiple steps into a single action, which allows for seamless integration with their platforms and enhances user experience. We address these needs on various levels, and this is among the key initiatives currently underway in our protocol.

Chris:

We consider integration and interoperability with other protocols crucial, especially regarding CeFi, which is vital for StakeStone. Our approach is threefold:

1. Compatibility of Underlying Assets: StakeStone supports a variety of assets underpinning the LST, from staking pools like LIDO, Frex, and Bluechip, to DeFi platforms like Balancer, Oro, and Maverick. This diversity allows us to integrate with a wide range of assets.
2. Cross-Chain Compatibility: Our focus extends to seamless interoperability across multiple chains. We uniquely customize our contracts to facilitate cross-chain price information for STONE without relying on Oracles.
3. Integration of the STONE Token: STONE, a developer-friendly asset, functions as the underlying asset for DEXs, lending, and derivatives, and can be used for collateral, funding fees, or liquidity provision. Its non-rebase mechanism simplifies integration across various protocols.

Recently, we collaborated with a lending company, witnessing a rapid embrace of STONE in the community, highlighting its effectiveness in providing additional yields. These aspects collectively enhance StakeStone’s integration across the crypto space.

Tony Sun:

For Range, we see this effort as to the first level is interesting whereas for us, it’s easy. Just developing strategies that interact with multiple DeFi protocols within those strategies and efforts like enabling our LP token to be taken as collateral to further enhance the capital efficiency.

But to me, the more important level is the interoperability level where our biggest effort is aiming at defragmentation. Right now, the liquidity is super fragmented across different actions and later uses. What we’re trying to do is to solve this problem by building vaults that connect liquidity across different chains in a trustless manner.

The protocols, which have a use case for the token to exist on multiple chains, don’t have to give out loads of incentives to bootstrap liquidity on every single chain. But instead, all the liquidity can be connected. The infrastructure we’re building just in time, liquidity, and RFQ base for balancing will enable us to do that.

Huncho:

Interoperability is a pivotal aspect of our strategy, especially considering my experience in the space dating back to 2015. The blockchain ecosystem, akin to open source culture, emphasizes collaboration and compatibility with multiple blockchains and stakeholders. This forms a solid foundation for our approach.

In terms of interoperability, our focus is on developing default protocols and products that incorporate this principle as a core element. Currently, our flagship product, the Ethereum Virtual Machine (EVM), has undergone rigorous security audits, setting the stage for seamless cross-chain functionality as we progress along our roadmap.

A key component of achieving interoperability is building strong partnerships and collaborations. This involves close collaboration with both internal and external developers and fostering productive relationships with Layer Zero solutions and cross-chain infrastructure providers, such as wormhole mechanisms.

Source: Canza

In the context of Africa, it’s essential to address the significant shortage of US dollars. Leveraging stablecoins like USD, USDC, or USDT across various blockchains is a critical aspect of our strategy. We are committed to working closely with bridge solutions and different blockchain projects and ecosystems to ensure that our projects support and enhance the broader DeFi landscape.

Our approach to interoperability is rooted in collaboration, robust partnerships, and a commitment to addressing real-world challenges like the US dollar shortage in Africa while advancing the capabilities of blockchain technology.

Moonshot Commons:

What new exciting features can users anticipate from your platform in 2024? Additionally, what is your strategic vision for the platform over the next couple of years, particularly?

Michael Nowotny:

At Krypton, we’re adopting a slightly different perspective from standard “Economics 101.” This shift is significantly impacting the cost of trading, who bears these costs, their extent, and who can monetize the benefits.

At Krypton, we’ve reimagined the execution of trades. Unlike traditional platforms where trades occur instantaneously, our trades are processed as continuous flows over time at a finite speed. This approach effectively counters toxic trading practices, such as exploiting information advantages, thereby reducing costs for market makers and liquidity providers. Our design also negates the advantage of being first, diminishing the relevance of ‘mine extractable value’ games.

This Tuesday, we’ll showcase how Krypton’s system neutralizes the tools used by toxic traders, making it irrelevant whether you’re a high-frequency trader or a casual investor. Our system is designed to minimize hidden costs like adverse selection and front-running, which have long plagued the trading world.

Krypton’s trading environment is user-centric, providing insights into potential trading costs and savings, and allowing users to modify orders as needed. Our goal is to demonstrate to the world, including traditional financial institutions interested in blockchain trading, that our system is more cost-effective and efficient than existing models.

Tony Sun:

Currently, our platform encompasses a variety of key offerings like liquid staking and RWA. We’re soon introducing a major overhaul of our app interface to simplify navigation and assist users and investors in finding strategies aligned with their risk preferences. Looking at our one to two-year plan, our goal remains to develop a comprehensive platform for asset management, catering to various asset types and user needs, including yield farming and market making in DeFi, as well as Layer 2 staking opportunities.

Source: Range Protocol

Understanding the dynamic nature of the DeFi landscape, with its frequent shifts and emerging opportunities, our long-term strategy involves maintaining agility. This approach ensures that our platform remains highly adaptable, enabling us to swiftly respond to market changes and assist users in capitalizing on new opportunities.

Umi Miyahara:

We’re excited about the new features coming to our platform and the Lightning Protocol, particularly what we can offer with our SDK. Our main goal is to surpass the current Fiat user experience, especially when it transitions to the mainstream, whether for Fiat or Bitcoin peer-to-peer payments. We’re focused on enhancing this experience significantly. Two exciting features of our SDK are support for slicing and offline receiving, which are particularly pivotal for the Lightning experience.

We’re observing an earlier-than-expected demand for our SDK, not just from the Bitcoin community but also from the wider crypto community. This demand emerges from various crypto platforms, apps, and users seeking Lightning support. Our vision is to drive the adoption of Lightning in both the Bitcoin and broader crypto spaces, as well as in mainstream applications. We aim to transition Bitcoin from being primarily a store of value to a medium of exchange, leveraging its utility for peer-to-peer monetary transactions.

In the coming years, we anticipate this pivotal shift in Bitcoin’s role and are preparing our technology to facilitate this transition across various applications.

Henry Zhang:

In the forthcoming year and beyond, we at DigiFT are excited to introduce three key areas of innovation in the market, all of which are geared towards expanding our footprint in the digital asset exchange domain.

Firstly, with our formal license for primary issuance, we are set to significantly increase the range of assets available on our blockchain. This initiative is designed to not only attract mainstream financial institutions looking to list high-value assets on-chain but also to broaden our offerings to include a wider range of digital assets. The efficiency and versatility of blockchain trading and subscription stand as key advantages that we plan to leverage, aiming to create a marketplace as diverse and comprehensive as Amazon’s.

Secondly, we are placing a strong emphasis on digital assets, recognizing the substantial demand and potential inherent in native digital assets. Our platform is being tailored to support the origination, distribution, and trading of these assets in a manner that is fully compliant with regulatory standards. This is a critical aspect, as various regulators have begun to classify digital assets under differing categories, some as securities and others under specific regulated domains. While there may be different viewpoints on these classifications, it is clear that a significant portion of these assets will fall under regulated categories. Therefore, it is imperative that our platform and all stakeholders involved — whether they are originators, traders, distributors, or otherwise — operate within the confines of these regulatory parameters.

Source: Asia Banking & Finance

Lastly, DigiFT is gearing up to play a pivotal role in this evolving landscape. Our platform is not only a compliant channel for listing assets but also an innovative avenue for trading. This approach doesn’t aim to replace existing channels but rather to supplement them by adding a regulatory-compliant option for sustainable growth.

Thanks to our current licenses and established collaboration with regulators, we are equipped to accept both fiat and digital currencies for investment. An example of this capability is the facility for customers to use USD for the purchase of US Treasury tokens and their subsequent redemption in USDC, and vice versa. This flexibility and compliance are central to our strategy as we focus on expansion and evolution in the upcoming years.

With these initiatives, we are committed to exploring and capitalizing on emerging opportunities, maintaining our focus on sustainable growth and stringent compliance, to offer our clients a secure and cutting-edge trading experience.

BlockMia:

I am pleased to share the upcoming advancements for Mystiko Network in the coming years. As a privacy infrastructure dedicated to decentralized finance, Mystiko Network has made significant strides, notably with the launch of a wallet accessible to all users.

Looking ahead, our focus is on enhancing our infrastructure to better support developers across various platforms. To this end, Mystiko Network is in the process of developing a comprehensive privacy SDK service. This service is specifically designed for device developers, particularly those specializing in wallet and exchange applications. It will be compatible with Ethereum, EVM chains, and Layer 2 solutions. Our goal is to cater to the needs of these developers, providing them with the tools and resources necessary to integrate advanced privacy features into their applications.

Furthermore, Mystiko Network aspires to function as a policy advocate for artist developers, offering tailored policies to benefit their users. Our vision is to establish Mystiko Network as the foundational policy infrastructure accessible to all developers and users within the next one to two years.

We invite you to explore the Mystiko wallet and participate in our ongoing campaigns. Your feedback is invaluable to us, and we are eager to learn from your experiences. This engagement will help us further refine our offerings and strengthen our connection with the developer and user communities.

Moonshot Commons:

From your perspective, what are the short-term (next year) and medium-term (2 to 3 years) forecasts that you have for the DeFi market, particularly in terms of liquidity?

Bayo:

In the short term, we anticipate a notable surge in DeFi adoption, primarily driven by product innovation and enhanced user experiences. Recent developments, particularly in account abstraction, are making DeFi more accessible to a broader audience, beyond just those with technical expertise. This accessibility is evident in the emergence of range protocols and DeFi aggregators, which simplify user interaction with underlying protocols through streamlined interfaces. The result is a cleaner, more user-friendly experience, likely to attract a wider user base.

Additionally, significant advancements have been made in user experience design, such as the introduction of wallets supporting peer-to-peer payments with mental stables. A prime example is the recent launch of Opera’s MiniPay wallet, which already boasts over 300 million users. Such innovations are expected to substantially increase liquidity in the DeFi market.

Source: PR Newswire

Furthermore, the entry of institutional players into the DeFi space is another key factor that will likely enhance liquidity. As these players integrate DeFi solutions, we anticipate a significant capital influx into the market.

Looking at the medium-term outlook, the DeFi market is expected to mature, characterized by increased stability, regulatory clarity, and the emergence of more sophisticated financial instruments. We are witnessing a trend towards the tokenization of global assets, which will likely fall under regulatory oversight. This progression points to a potential surge in liquidity in the DeFi market, as it becomes more structured and integrated into the broader financial landscape.

Overall, these trends suggest a dynamic and evolving DeFi market, moving towards greater accessibility, sophistication, and regulatory alignment.

Chris:

From our analysis, we identify three major trends that are likely to shape the future of liquidity in the financial markets. Firstly, we anticipate that the cost of liquidity will increase. Liquidity providers, who are becoming more organized and experienced, are gaining significant bargaining power. This leverage is particularly evident when they aggregate substantial amounts of liquidity, influencing both individual platforms and entire blockchain networks.

Secondly, we foresee a shift in the nature of liquidity assets. The trend is moving from non-yield-bearing assets, like Ethereum, to yield-bearing ones, such as LST. This shift is expected to considerably reduce the costs associated with accumulating liquidity, especially during the initial bootstrapping phase of platforms and networks. The adaptability of yield-bearing assets in various use cases further underscores this trend.

The third trend pertains to the location of liquidity. We believe that as certain major Ethereum Virtual Machine (EVM) chains demonstrate enhanced security and reliability over time, they will increasingly attract liquidity. Additionally, as opportunities for alpha on the mainnet diminish, Layer 2 solutions are expected to emerge as significant attractors of liquidity, offering enhanced opportunities for yields. This scenario is not only a natural evolution but also a driving force behind the movement of liquidity towards Layer 2 platforms.

In summary, our prediction for the future landscape of liquidity is threefold: an increase in its cost, a shift towards yield-bearing assets, and a migration of liquidity to Layer 2 platforms and other chains, motivated by rising yield opportunities.

Honcho:

From my perspective, particularly focusing on emerging markets, it’s evident that the majority of digital asset transactions, including the processes of entering and exiting the market (on-ramp and off-ramp), are predominantly payment-driven. This trend is expected to intensify in the future, especially with the various initiatives undertaken by entities like USTC and USCT, along with other stablecoins that are increasingly focusing on the African market. In my view, the upcoming year promises to be quite significant in this regard.

One key aspect that could influence this scenario is the pre-halving period, which I believe will attract more retail and, to some extent, institutional interest. Following this phase, we anticipate a period of heightened activity. Additionally, the upcoming U.S. election next year is likely to add another layer of complexity and interest in the market.

In terms of institutional involvement and job creation driving utilization, we can expect a substantial influx in the market over the next two to three years. Echoing the sentiments of my predecessors, the market is likely to mature significantly during this period, accompanied by more comprehensive regulations. This expectation is based on my extensive experience in compliance and regulatory meetings across various countries, dealing with multiple standards and frameworks.

Looking ahead, I am optimistic about the potential for more integrated and efficient systems like on-chain FX, which could revolutionize the space with more streamlined and effective transaction flows. Overall, the next two to three years in the digital asset market appear to be promising, with the potential for substantial growth and maturation.

Michael Nowotny:

Looking ahead to 2024 and beyond, it’s clear that institutions will play a pivotal role in shaping the future landscape. Currently, the high costs associated with DeFi are a significant barrier for traditional financial (TradFi) asset managers. These professionals, who often aim for a 1 percent alpha per year, find the fees in DeFi, such as those on platforms like Uniswap, prohibitively expensive. The charges, including protocol fees and potential front running costs, can erode their entire yearly gains in just one transaction. This issue is further compounded by the quadratic price impact for larger trade sizes, making DeFi an impractical choice for them.

Source: Krypton

When considering the trading volumes, DeFi, across all blockchains and protocols, both spot and derivatives, accounts for approximately five billion dollars daily. This figure, while substantial, pales in comparison to CeFi in the crypto sector, which sees daily volumes in the hundreds of billions, and TradFi, where daily volumes reach into the tens of trillions. Despite DeFi offering a broader range of cryptocurrencies and tokens, CeFi’s trading volume is significantly larger.

Initially, my goal was to introduce decentralized, high-tech asset management to the world through DeFi. However, the prohibitive trading costs and the lack of suitable trading venues presented substantial challenges for both my operations and my users. Recognizing these limitations, our focus at Crypton is to establish the first viable DeFi alternative for institutional players. We are committed to shifting not just billions, but potentially tens of billions, and ultimately trillions of dollars in trading volume from TradFi to DeFi. Our aim is to position blockchains and decentralized finance as the global standard in trading.

Moonshot Commons:

What do you identify as the major unresolved challenges or emerging issues in the Web3 financial sector? How is your project preparing to tackle these as the infrastructure layer?

BlockMia:

In the current landscape of DeFi, there are numerous challenges to address, including issues related to liquidity and compliance. Each project on this panel brings unique expertise to tackle these challenges. From the standpoint of a privacy-focused project, we recognize that privacy has always been a critical concern in the DeFi space. While blockchain technology offers commendable transparency for transactions, it also poses a dilemma due to its high level of transparency. There is a consensus that individuals and entities do not desire their transaction and payment histories to be openly accessible and scrutinized.

This concern extends to traders who prefer to keep their trading strategies confidential. Addressing this need for privacy, Mystiko is positioned to act as a multichain privacy layer. We plan to offer this service in the form of an SDK (Software Development Kit), providing a straightforward tool for developers across various chains. This SDK will be integrating privacy features into their protocols without requiring in-depth knowledge of cryptographic techniques like zero-knowledge proofs (ZKPs).

Our approach is focused on making privacy both easy and accessible for all users and DeFi developers. We are in the process of creating a user-friendly and developer-friendly privacy multichain SDK. This tool will allow applications to seamlessly incorporate privacy features, ensuring that such functionalities are readily available to users as needed.

Tony Sun:

At the risk of echoing my previous response, the fragmented liquidity remains a paramount challenge that requires our attention. My background lies in trading foreign exchange (FX), and the difference between executing a hundred-dollar trade in traditional currency compared to a few dollars in Bitcoin is quite evident. While there have been improvements, it’s fair to say that we are still in a phase where liquidity is shifting towards efficiency.

However, this shift comes with a trade-off, as the increased efficiency often leads to greater complexity for the average user or investor. A prime example of this complexity is evident in the evolving landscape of DeFi. Notably, platforms like Ethereum have seen substantial developments, but the user experience has grown progressively intricate.

The overarching trend I observe is the emergence of highly efficient DeFi protocols that offer a high degree of customization. Simultaneously, these protocols become increasingly challenging for the average user to navigate. This is where our role comes into play. We actively engage with various projects, some of which may still be in stealth mode, as they undertake remarkable work.

Our mission is to facilitate the transition to a financial system where assets are professionally managed by sophisticated participants. This transition aims to strike a balance between efficiency and accessibility, ensuring that DeFi remains a viable option for all users.

Source: airdrops.io

Umi Miyahara:

It’s evident from the perspectives shared by several speakers that liquidity is a recurring theme in our discussions. This holds true for our focus as well. When we delve into the Lightning Network, we often refer to it as a “liquidity network.” What becomes crucial is the precise allocation of the right amount of liquidity at the right moment and in the right location. With an increasing influx of liquidity onto the network, we ensure a higher likelihood of successful payments.

We’ve witnessed a positive stabilization in this regard, especially throughout the past year. There has been a notable increase in liquidity and the participation of new entrants in the Lightning Network. This has contributed to fostering a robust ecosystem, albeit with its own set of challenges.

In our efforts at Breez, particularly through our open LSP (Lightning Service Provider) model, we aim to democratize participation and empower third-party LSPs to contribute liquidity to the network. Through this model, they can allocate Bitcoin from their treasury to the Lightning Network, all while earning a Return On Investment (ROI) in Bitcoin, without compromising custody. This liquidity influx drives greater demand from the end users of our SDK, resulting in increased payment transactions.

Our business model revolves around creating a virtuous cycle where LSPs supply liquidity, SDKs stimulate end-user demand, leading to ROI for LSPs. We are also actively collaborating with other players in the ecosystem to establish an LSP specification that enables third-party LSPs to participate in various models.

Another challenge we are addressing within the Lightning Network pertains to the off-ramping process, both from Lightning to fiat and from fiat to Lightning. Off-ramping, in particular, remains a complex task. To tackle this challenge, we are leading the development of a specification known as “Fiat Link,” in conjunction with other ecosystem players.

These key initiatives represent our commitment to working collaboratively with Lightning Network participants and the broader ecosystem to address these challenges, ultimately charting a path toward resolution.

Henry Zhang:

When discussing liquidity, I’ll keep it concise. Liquidity is undoubtedly a significant challenge within the realm of Web3. The issue at hand primarily revolves around the insufficiency of available liquidity. The next logical question is how we can enhance liquidity.

To address this, we need to consider a few key aspects. First, there’s the technological dimension. As some of our partners have already highlighted, technological advancements play a pivotal role in making liquidity provision more efficient and cost-effective. Technologies like Automated Market Makers (AMMs) have introduced innovative liquidity mechanisms, which is a noteworthy development. However, it’s crucial to acknowledge that these new methods have their unique features and limitations.

Source: Shardeum

From a technological perspective, continuous improvement is essential to overcome these limitations gradually. Second, we must explore new sources of liquidity, specifically individuals who contribute funds to DeFi and Web3 protocols. While traditional sources remain significant, we should also turn our attention to institutional capital due to its substantial volume.

Lastly, regulatory compliance is a critical consideration. Ensuring that our operations align with regulatory requirements is vital for uninterrupted business growth. It’s essential to proactively address regulatory concerns from the outset rather than dealing with them as post-event considerations. In summary, these points encapsulate some of the key considerations regarding liquidity enhancement.

Moonshot Commons:

Considering the recent positive trends in the cryptocurrency market, do you view this as the beginning of a new bullish phase?

Bayo:

While recent positive trends in the market are encouraging and may suggest the onset of a bullish phase, we must exercise caution given the inherent volatility of the market. At Mento, our primary focus remains on constructing sustainable and robust solutions capable of withstanding market fluctuations. One such example is our circuit breaker system. Regardless of whether the market is in a bullish or bearish phase, this protective measure ensures the stability of any stable assets issued on our platform.

Mechanism of Circuit Breaker. Source: Mento Labs

Chris:

In the future, we envision orchestrating strategic conversations and establishing positions aimed at enabling omni-chain liquidity distributions. Our objective is to play a pivotal role in facilitating the entire DeFi space and the broader multi-chain ecosystem by enhancing liquidity and capital efficiency. Central to our vision is the LST and its omni-chain distribution network.

Moonshot Commons:

What brought you all here to Hashkey Portfolio Demo Day and to the AMA? Who are you looking to connect?

BlockMia:

This has been an exceptional session, and we extend our gratitude for orchestrating this gathering. At Mystiko, we are continually enthusiastic about collaborating with blockchain developers, particularly those involved in wallets and exchanges. We are equally eager to partner with any stakeholders interested in integrating privacy features into their protocols.

Beyond that, we maintain an open-door policy for engaging with members of the community. We value staying abreast of the latest trends in the space and exploring how we can provide enhanced support. We extend our thanks once again for inviting us to this panel, and we eagerly anticipate connecting with developers, committee members, investors, and anyone involved in the HashKey ecosystem.

Feel free to reach out if you have any questions or if you wish to explore further discussions with Mystiko.

Tony Sun:

I am genuinely excited about the innovative work being undertaken by MentoLabs and Crypto Labs. I plan to initiate contact for a more formal and comprehensive discussion shortly. There is substantial potential for collaboration and synergies within the Demo Day groups here.

Umi Miyahara:

I’m thrilled to be here, and it’s been a pleasure meeting everyone at Breez. We are actively seeking connections with individuals or teams interested in developing on the Lightning Network using our SDK. Whether you’re a developer with innovative ideas or if you’re considering building something, we’d be delighted to connect.

Source: Breez

Additionally, if you are interested in exploring our open LSP (Lightning Service Provider) model and can provide liquidity and generate an ROI, we are open to discussing potential collaborations.

We welcome anyone who wishes to join us on our journey to scale the Lightning Network and make Bitcoin accessible to a broader audience. If you’re interested, please don’t hesitate to reach out for a conversation.

Henry Zhang:

First I want to express my sincere gratitude for organizing this event. I thoroughly enjoyed the discussions and found them highly valuable.

In terms of our interests, we are open to engaging with investors, asset providers, and various stakeholders. The group assembled here today has been truly fantastic, and I have taken copious notes. I am eager to connect with virtually everyone who participated as a speaker in this call.

Given the depth of expertise in this group, I believe there are significant opportunities for synergies among us. I plan to reach out to explore potential collaborations. Additionally, if you are interested in DigiFT as a regulatory-compliant platform for digital assets on public blockchains, I invite you to reach out to us. We would be delighted to continue the conversation. Thank you once again for this opportunity.

Source: BSC News

Bayo:

I’d like to extend my gratitude for hosting this event, as many others have expressed. We are keen on connecting with investors, but even more importantly, our core mission at Mento Labs is to facilitate the real-world adoption of digital assets. We achieve this by offering a stable, transparent, and robust platform.

Source: Mento Labs

If you share our vision and are interested in contributing to our mission, I would welcome the opportunity to connect with you. Additionally, for those who are exploring the launch of their own stablecoins, we are eager to collaborate and learn more about how our platform can assist you in achieving your goals.

Thank you once again for this event, and I look forward to engaging with like-minded individuals who are aligned with our mission.

Chris:

I genuinely appreciate the opportunity to establish meaningful connections here.

We are enthusiastic about connecting with builders and projects across various chains that have requirements for LST. We see great potential in integrating STONE as standard collateral on different blockchains, making it a versatile asset.

Source: StakeStone

Furthermore, we are keen to engage in conversations with investors who share an interest in StakeStone. These discussions could pave the way for exciting collaborations. Thank you for having us here, and we are excited to be a part of this event.

Huncho:

In brief, I’m open to connecting with individuals or entities interested in emerging and frontier markets, developers, stablecoin issuers, as well as FX partners and FX desks with a focus on the Asia Pacific region seeking exposure to Africa. Thank you for your time, and I look forward to potential collaborations.

Michael Nowotny:

Thank you for organizing this Demo Day, and I’m thrilled to have the opportunity to share our progress with all of you, both locally and globally. At Krypton, our primary focus has always been our users, and this remains our unwavering commitment.

While we’ve predominantly engaged with users in Western regions, such as the United States and Europe, through platforms like NASDAQ Trade Talks, Bloomberg documentaries, and keynote appearances at SmartCon and the Avalanche Summit, we are now eager to expand our reach and connect with a broader, more international audience.

In my view, the essence of crypto lies in transcending geographical boundaries and creating a unified global standard for trading. Therefore, venturing into international markets, particularly in Asia, is a natural progression for us.

Source: Krypton

If you’re curious to learn more about Krypton, how our platform operates, and what we have in store, I invite you to visit kryptonbeta.com. You can sign up for early access and stay updated with our latest developments and news. Additionally, joining our community on Twitter is a great way to stay informed about our progress.

Over the next three to six months, we will be focusing on fine-tuning our minimum viable product and reaching critical milestones. While we won’t be launching a funding round just yet, when the time comes, we will greatly appreciate the support of the community as we continue to innovate and contribute to the DeFi ecosystem.

For those curious about our journey, please join us at this demo day and explore our website for more information. Thank you for your attention, and we look forward to connecting with you.