ETHWarsaw 2023: Paweł Łaskarzewski, Nomad Fulcrum - From Legacy to Innovation

okay guys so uh let's start the next talk and uh pav will tell us uh more about uh um trfi and defi combined together so let's welcome Pavo uh wormly hi guys a lot of friendly faces uh how much time do I have uh like 25 minutes you know I would try to fit in uh hi so uh my name is Pavo waski some might recognize me as a co-founder of uh signups Network and right now the CEO of namad FAL uh which is uh as many say are saying uh inflation shielded stable coin and today I will try to uh fit you in into the world of uh combination traditional finances with with crypto with defi and why in my opinion this is the future of both Defi and traditional finances so moving forward I will try to focus today on awas what are awas so probably most of you have heard about real world assets this is a trend that very often is right now tackled but but by a lot of organizations this is the trend and the new wave of the dii protocols and the projects that are trying somehow to be involved into tokenization you might heard about Ling from Black Rock that is shouting around all the time that tokenization is going to be the future of the of the crypto world and in my opinion defi with combination with rwas so traditional Financial Market will give us a a better defi at the end and we've seen some kind of approaches that revolutionized crypto market right now most of you might not know or uh haven't noticed that stable coins are such a products those are rwas on the second side theor theor sorry theoretically uh we have in Teter uh capital in traditional Market uh in circle we have those audits so they have bonds us bonds they have cash on the account so they already are aw and as you seen what stable coins brought to the market is stability in certain points is something that is a stable store of value that we can trade to that we can use as a as a place where we are leaving while selling our altcoins while selling our Bitcoins or any other coins let me turn this off so uh this is very important because in the current market conditions as we have right now on the market people are looking for safe store of value so where we can what what options do we have we can put it into D5 Farm okay but it's not so secure I will tackle this point later on we can put it into any other you know top 100 coin but the volatility is like 70% so the question is what is our ability to risk like I believe if we are looking a safe store of value we are not looking for 70% of volatility so uh stable coins brought this kind of approach and and uh I will start uh the whole conversation with you about the statement that currently defi concentrate only on crypto and I will show you a couple of points that are proving this that I'm right and that uh hopefully you will agree with me uh and start with the problems because relying only on crypto assets while building crypto Solutions in my opinion is a mistake we should combine things together and the problems are starting from lack of transparency proof of reserve and we had a very good example of that which was usdt like everyone is saying that usdt have some reserves but no one knows what is under theath no one knows if in Teter we're going to have a bank run let's say 50% of the people will would like to withdraw the capital if Teter will survive if they have enough cash liquid cash or assets to liquidate them to pay this back no one knows so that's the first problem another one is proof of Reserve like algorithmic stable coins we've seen hundreds of different approaches to algorithmic stable coins how many survived I don't know one maybe die that's it like we seen Luna which is algorithmic stable coin uh and this is another problem I will uh tell in a sec like another issue with defi is that it's vulnerable for economic and security hugs so uh this vulnerability is because of couple of reasons and at the end also I don't know if you know but more capital in the crypto has been lost due to hacks than due to scums every week you hear another defi protocol 100 million loss albt in January this year 120 million every week we we hear the story about another protocol that has been hacked because of the security reasons or which has been hacked because of the economic vulnerability and that's a problem and this problem is leading us to one of the biggest issues in the defi that most of the people do not notice it's securing one asset with another asset of the same class so we are securing one crypto with another crypto what can what what can go wrong like in Luna we had USD which was secured by Bitcoin and Luna so we seen what happened another example most of the over collateralized Protocols are asking you to provide 150% of the security of the collateral why because of the volatility on the market because once Bitcoin is going down the value of the collateral is going down and then we see all those headlines massive Liquidations in crypto billions loans once again that's why most of the defi protocols have the time span of uh four three years and after that most of them are providing a huge liquidations for the for the users that are using that but what if we would replace a super volatile assets of the same class with different assets let's say baked by real world assets RW then traditional Market uh stocks indexes hedge funds do not care about the Bitcoin price so then the collateral is going to be not pegged to the assets that we are borrowing and that might be a very good and interesting solution and another issue is that this statement is basically the statement that killed the market in 2008 you all watched The Big Short so you know what happened like one person was buying a house and they were using this house this Mortage to provide as a collateral for the second one so what is the difference we use one crypto to provide as a collateral to borrow another crypto like we borrow Bitcoins and provide 150% of the collateral in there so basically we repeat the same mistakes in there that's why this is so important to use different asset classes to build protocols and to combine them together uh another thing is something that I just told you and like need for big overcollateralization in the crypto because of the volatility and other things but the main issue with that is that there is a big capital in Effectiveness let's say I want to borrow one Bitcoin I need to provide 150% in ethereum to cover collateral like it's 50% more there's a lot of capital that is locked and I cannot use it let's imagine the product the financial product that has volatility of 3% or 5% and is packed to real world assets like Bill building or something and it's liquid so I can provide this to the protocol and protocol can start asking for I don't know 10% of the collateral over the over the value that I borrow I'm borrowing so this provides much better like 80% better 80% better uh Capital Effectiveness so we can do something with this money we don't need to provide this and our collateral is not going to be so vulnerable on the market movements so that's why this element is also super important this this combination uh another one lack of stability High volatility and low liquidity basically that should be in different order because low liquidity Pro makes high volatility and high volatility makes Market unstable so all of those elements are the reasons of this and reasons of and this is also one of the reason of of those things so another issue is something that probably most of you know and are aware like where the yield in the crypto came from yeah that have you ever seen the company in the crypto that is making a profit or dividend or Revenue stream this those are the words unknown for the crypto companies in most cases of course that's why most of the yield is based on the printed outof thee token which increase uh which increase uh Supply it's inflation every now everyone knows that inflation is not a good thing and this devaluates the token so what RWS can bring to the market is real yield so RWS can provide a real yield to the market that is based on the real money real cash flows real Revenue stream and real profit not on something that is printed and in the longer run will influence in the bad way the whole protocol and of course over Lage leverage position everyone heard about the people that are providing liquidity they are taking liquidity tokens provide as a collateral somewhere else taking this collateral tokens and provide somewhere else etc etc the same as in 2008 like you've watched The Big Short and this girl who was a strip club uh girl strip dancer and she had five houses Each One secured by another one it's the same thing over collaterally over leveraged positions and everyone is each one of those is secured by by uh the asset uh of the same class and that's a big problem so uh this is where RWS can help us with also and another problem uh is regulatory uncertainty so right now while building business I don't know if my business is going to be legal in a year I don't know if if I will build build a big enough company that is successful it's making profits is generating like Revenue Etc if in a year some or in two or five someone will tell me will not tell me pav but your business is not fitting the regulations you are not able to provide this kind of products to the market because it's breaking this and this and this rule or you should have a banking license or something and it's going to be a problem so that's why The crucial things and I'm not saying that regulations are bad or wrong but the crucial things is to have Clarity we don't have like Clarity at all in crypto that's why everyone is opening companies in BVI Panama Dubai everywhere just to find a space when there is at least a certain part of clarity how we can behave and what might be the future of the of the crypto in terms of taxes because that's the problem no one wants pay taxes and in terms of uh legal uh ability to provide services so uh that's why uh RWS are crucial to development of Def because they can provide a lot of new ways to build things like uh everyone is thinking that awas are for example uh stocks tokenized stocks or companies or buildings like we seen hundreds of different approaches to tokenize real estate most of them failed because they did it did it wrong but I will go back to the to the examples later on like I know two companies that are successful in that and one is propy I will tackle this this this later on as well but we can tokenize everything like tokenization basically is changing a liquid asset to liquid we can tokenize grains we can tokenize cars we can tokenize buildings we can we can tokenize basically anything that have some kind of value and provide some kind of profit and income to uh the end user at the end with different risk scenarios of course uh and that's why this is crucial because this is allowing us to build a whole new Economy based in crypto and another thing is why there's AWS are crucial not only for the development of of crypto but and defi but also traditional Market why today I can buy contracts on oil between five uh between 9 and and 5 from Monday to Friday do they shut down internet or what's what's wrong like this is because of the Legacy systems that has been created in 50s and they basically look the same till today so they do not allow us to make those transactions over like uh 5:00 p.m. and during the weekends because in the past internet was a very expensive thing it's not anymore but still the systems works the same so solution is tokenization blockchain and allowing basically for free trading sending and making transactions between A and B 24/7 and L thing is uh talking about this all the time uh guy who is a c o of Swift is speaking that they do R&D right now around the topic of providing blockchain as the underneath technology to remove all the correspondent Banks who of you were sending money abroad in dollars and then on the second side of your transaction arrived 80% or 90% of the capital and you you feel me why those correspondent bank banks are taking uh portion of the capital because that's how the system was structured because of the internet in early 60s 70s Etc which was super expensive so right now there's no an issue like this anymore so we can use those RWS and tokenization to to change the market and to influence this heavily and tokenization like everyone is speaking about tokenization like we feel that tokenization is a crypto thing it's a new thing that we have been built and we discovered in crypto false statement it's not true at all like tokenization is with us for c for centuries uh and in the financial Market it actually have its own name securitization who heard about securitization in the past hands up yeah I see some people are still after the party when in the in the after party modood Okay cool so uh securitization this is the thing that killed the market in 2008 so there were mortages they were packing mortages into securitized SL tokenized units and they were selling this on the market the main problem was that the value of those mortages that were packed into those tokenized units were depreciating its value over the time but the rating agencies were saying all the time and lying the value is in here so while the value was depreciating and achieved that level everyone said yeah the value is ex exactly like minus 90% And The Market dropped within a second so we can do a lot of stuff in the crypto to solve that problem we can use oracles to provide reliable data data we don't need to rely on the rating agencies that are providing a false information and are paid by someone we can have an army of notes that will read information outside and provide in here and I'm calling basically when I'm speaking with Bankers I'm telling them that tokenization is not not a new thing it's a ization 2.0 and this is what makes them crazy this is the moment when they are starting to listen because they know how much Capital they made on securitization in 2008 after before they killed the market so what this tokenization is bringing over securitization which was the concept that was on the market for years so liquidity that's the first thing let's back to the big short thing so we had this securitized units but they were available in One Bank in Second Bank in Third Bank so we had silos there is no way to trade those units in between but with blockchain I have access to everywhere I can sell it on Dex sex within within an institution because I'm an owner of that I can do whatever I want I can do OTC trading with units that were on the paper agreement I had the big paper you've seen how big paper agreements uh Michael Barry was signing there and those are the paper agreements that we are signing with banks for 600 Millions so my units are not real there are they are on the paper so it's super liquid asset and tokenization is providing a big liquidity a big change in the market in the market size the second one is accessibility who could buy those swaps in 2008 institutions only who made money in 2008 on the market crash institutions there was no way for the retail customer to buy one unit of swaps on the uh defaulting uh Market housing marketing States but with tokenization I can buy how many zeros can be on evm 18 yes so 0.71 and can buy this kind of fraction of one unit which will grow over the time or not Etc will which will behave in the same way as 50,000 of the same units so tokenization give me this accessibility everyone can step in and have access to products Financial products professional ones that before were unavailable for retail customers or for anyone with small amount of cash ownership if I have this deal with a bank and my units are stored in a bank my shares in Tesla that I will buy on the exchange are stored by a broker who owns that not me I'm just leing those things and they are storing that they can do anything if their systems will not going to work and the Tesla will crash I can do a that's my problem I can sue them yeah fight with a you know Bank of America or someone good luck it's not going to happen so ownership is the thing that is solving a lot of problems because I'm owner and if something is happening because of the liquidity and accessibility I can sell it on the market within a second I can provide some solutions or algorithm or uh stop losses or anything to exit my positions we have a paper based agreement ments Etc it's not possible so the last the last thing is trust in crypto and in financial Market no one trust anyone this is the rule in the financial market and in the crypto in the crypto because everyone wants to scam you but in financial is because everyone wants to scam you so it's the same problem but if you have liquidity if you have ownership there is a trust because you own that unit you have this on your own you can do whatever ever you want no one will tell you what is possible or not and challenges of course there are challenges but lucky us there are also Solutions so one of the biggest challenges regulatory challenge like we have all heard about Mika Dora those regulations Biden regulations blah blah blah but there are not yet in here those are prospects those are drafts that are going to be implemented in a year in two years I don't know when and that's an issue because we have some clarity on the horizon but the problem of the Horizon is closer you are to the Horizon it's further from you so we don't know when they're going to implement we have some clarity so that's the challenge but the solution for that is start build company and business that was that going to that is going to be as close to the regulation as possible so in the moment if they will hit the play button and say everything is implemented right now you need to be compliant to all the law then we are ready to go and we can start operating on with our product on the market While most of the people is going to be removed out of the equation because in the crypto everyone is scared about about regulations and most of the people will never going to be regulated so if you're going to be or someone they going to win the market Market uh because uh we cannot we can make protests we can say that regulations are bad but this not going to change anything this is uh going to be like nice thing maybe coin Telegraph will write that Pavo is protesting in Poland against regulations but this will not stop them so you need you have to be pragmatic in that sense so practical applications of AWA in defi so I believe I covered a lot of different cases and and examples but uh uh one of the most important elements in my opinion is that diversification is stopping repeating the same problems that were in the past and traditional Market is to learning from what was happening there it's stopping to provide and securing assets of the same class with assets of the same class so that's something that is the most important thing I would I would repeat that a couple of times and case studies so I will show you a couple of companies that are super interesting things that you would never think that you can tokenize something like that dictator okay I yeah I try to uh so uh dictator is a alcohol brand they produce Ram this is 120 year old alcohol brand in Colombia you can buy this in every bar in waro and they have this investment alcohol 100 year old bottles 40 50 100K so why they are tokenizing this who knows how to store 100y old butter properly I don't so they are tokenizing this and selling in form of I bro uh in form of uh NFS to provide certificate of ownership with trusted third party that will ship this to you and they will store it for you so once I'm going to try to sell it in 5 years this investment alcohol to someone else else I don't need to provide a proof that I was doing this properly because this company is doing this for 120 years second problem they simplifying the secondary Market try to sell this alcohol in Dubai it's Haram it's forbidden 11 years in prison but I can sell nft always in in Dubai you have two companies and those are Shake companies that have licensed to trade alcohol yeah but I can't I can't bro bring a barrel of alcohol which is investment Al to sell it what I have friends there I tried I tried I tried so this is why and this is the interesting part and they are making 20% a year yield on this investment alcohol so liquid asset to liquid lofty and propy so I will just two minutes propy is the the only one company that I know this is my friend Diego mcdonaldo and they make it in States tokenize real estates one and a half billion because law in States allows for such a thing of course our own company so we are tokenizing hedge funds uh AGR token grains so they tokenize grains that they are selling worldwide and uh you have this APR based on uh on those grains yeah Opus melt so yeah and the future is in my opinion uh in combination of those two worlds I'm finishing I'm getting there don't look at the clock uh so uh the future is very very bright in my opinion because both businesses traditional finances and and uh Defi and crypto can benefit from each other like while merging those two things all the problems of the traditional Financial Market might be might be solved by the crypto Solutions and crypto might be fixed with rwas and what uh what traditional Financial Market is is bringing and almost the last words words if you are thinking about building your own business or company start now because if you have any kind of idea in your head probably 1,000 other people have exactly the same idea but it's not about all about the idea it's about execution so develop try fail and repeat and this is the recipe for the success and at the end I would like to quote my favorite scientist Nicola Tesla let the future tell the TRU and evaluate each one according to his work and accomplishment the present is theirs the future for which we have really worked is ours thank you very much my name is Pavo [Applause] waski any questions to pav we'll have time for like one or two questions bring it on Adrian yeah uh with all the rwa trying to tokenize right like I think what in the space is looking for right now is like one Authority that actually dominating okay like uh one let's say I have a I have a friend who is actually building a realistic in Thailand right and he's trying to tokenize it but how can we verify okay this is a your platform is like a trusted Authority that uh tokenize it and and not to have them to tokenize elsewhere and duplicate this tokenization do you know what my question is what so what is the question so the question is uh if I have this phone I want to tokenize it through your platform how can I be how can you as a platform only vertify that okay well agent phone is already uh tokenized here and agent's phone cannot be token elsewhere the problem is that this is not a liquid asset so that's the first problem but realistic I mean this is a throw away object the second is not generating an APR so the main thing for tokenization I would I would say for the future tokenization have to be two things they have to be liquid they there there have to be a market because while tokenized things that are cannot be liquid and another is they need to provide APR because otherwise what's the point yeah we this I said real realistic like hotels okay yeah so how can we make sure that hotels like let's say Platinum Bay is the hotel name right uh to tokenize on your platform and then there is like a system to prevent that company to tokenize elsewhere so the main problem of tokenization of in general real estate was that most of the companies that ever tried to tokenize real estates and 99% of them were doing this wrong was there was a token that was promising that there is some value underneath and there was company that was owner of real estate and there was no any legal connection between token and the real value representation so in general most of the people that I know that were trying to do tokenization of real estates they were buying real estates by the money they raised for this token and they were using this house Flat some of those were paying some interest somewhere not but at the end if something will happen you don't have right to do anything so the most important thing if speaking about tokenization is to ask the company that is providing tokenized asset what is the combination and what is the legal binding of the token and the value underneath that's the most important thing that everyone should ask while speaking with RWS yeah you answer it thank you no problem uh okay uh any other question the final one yes yes no no there are no thank you very much Pavo an awesome [Applause] presentation