"DeFi Space Welcomes Anyone, From Anywhere" - Victor Larionov
A New Era of Fundraising Through DeFi
The growing competition among technology firms ensures uniqueness is of the utmost importance. Catering toward a growing user base is crucial, but achieving that goal is never easy. Taking one's startup to the next level through DeFi is a great way to leap ahead of competitors.
Unlike traditional ways of raising funds, the DeFi industry provides unprecedented liquidity and exposure. It is the hottest trend on the market right now. With over $7.1 billion locked in various protocols and platforms, the industry is firing on all cylinders. Lending platforms such as Aave, Compound, and Maker have attracted a lot of attention. Their token values have also shot through the roof, with every individual project valued at 50% of their total value locked or more.
Aave has over $1.50 billion in total value locked, whereas Maker has $1.42 billion, and Curve Finance comes in third with $1.14 billion. This growth has been facilitated by the overall steep growth of DeFi Total Value Locked. In early June, just under $1.5 billion was invested in these platforms. That figure has now increased by over 450%, and is likely to keep rising. In the past week alone, another $500 million has been added to DeFi platforms and protocols.
Tapping into this segment is a core sign of innovation and embracing new technologies. This is also the type of tech startup that Priority Token aims to extend its services to,
The booming DeFi sector has attracted attention from various companies now exploring this segment. Mainframe, a lending platform, recently acquired Sablier to pivot its business model. Blockchain platform Qtum has announced its renewed focus on decentralized finance as well. Considering how this is only the beginning of what the future may hold for decentralized finance, now is the time to capitalize on the growing momentum.
Capitalizing on DeFi Opportunities
Engaging with DeFi platforms will let users earn money in return for providing liquidity. Popular current models include lending (and borrowing), yield farming, and so forth. All of these options pose minor risks, but they also provide significant rewards.
These functions will always remain popular, but there will be other use cases in the future. Many more use cases will come to fruition in the years to come. Being part of this new industry at an early stage is crucial.
These ongoing shifts will create many new business opportunities and challenges, particularly where fundraising is concerned. Victor Larionov, CEO of Priority Token, shares his views on this aspect, as well as the broader DeFi segment.
Victor Larionov is confident that DeFi can catalyze growth of the 4th industrial revolution. Decentralized finance is an exciting industry with tremendous opportunities, he says. As an expert on the matter, Victor is eager to share his views on this industry, its evolution, and why more companies need to begin paying attention to it. Below is the knowledge he shared with me during a one-to-one interview.
Andrey Sergeenkov: The DeFi market has undergone massive growth. What is remarkable is the number of companies turning to cryptocurrency. What is driving this change, in your opinion?
Victor Larionov: Being able to recreate financial products and services without middlemen and through decentralized infrastructure is extremely relevant in this modern age. Banks and other financial institutions are responsible for the 2008 financial crisis.
Even during COVID-19, these same organizations have made life unnecessarily more difficult. Issuing helicopter money and stimulus packages sound positive on paper, but it devalues - and can ultimately destroy - any economy.
Quantitative easing has been a standard go-to solution for banks, even though it is an unsustainable business model. Moreover, banks now offer negative interest rates on personal savings, making it unappealing to keep money in a bank account. Putting that money to work and being able to earn better rewards by doing so is attracting a lot of attention for these reasons alone.
Decentralized finance provides this opportunity to people from all over the world. it doesn’t matter if one has access to financial services and products already. The DeFi space welcomes anyone, from anywhere, with little or a lot of money to spare.
Andrey Sergeenkov: Are you surprised by the number of companies currently exploring this new segment?
Victor Larionov: It has been a welcome surprise. I recently read a PwC survey that shows how nearly half of financial intermediaries are targeted by cybercriminals. This is, in turn, one of the reasons why more and more companies explore DeFi today. Ever since Rainier AG decided to shift its approach, others have followed their example.
On a broader scale, the Defi industry is attracting attention from venture capitalists too. Primarily decentralized lending platforms have seen a strong influx of capital. In the Ana.vc report of July, 40% of the closed deals relate to DeFi in fintech. Such a trend never goes by unnoticed in the technology sector.
A recent example of a successful DeFi-crowdfunding combination is Orion Protocol. Its “dynamic coin offering” is a unique model, which allowed the company to secure more than a million. We at Priority Token aim to offer such opportunities to many more companies and startups.
Andrey Sergeenkov: Given this rate of growth, do you expect this trend to continue, or is this a mere flash in the pan?
Victor Larionov: The technology sector continues to grow by leaps and bounds, particularly the adoption of innovative technologies is on the rise, which will give way to more companies providing competitive services.
Most of these companies will, at some stage, be in need of help. Whether it is financial aid, legal concerns, or digital logistics that need to be addressed, it is crucial to offer a helping hand. Innovation, growth, and competition need to be fostered, not stifled.
That being said, all of the projects mentioned above have soared in value and brought significant returns to initial investors. This further highlights the potential of DeFi solutions and what they can bring to the table in the fundraising industry.
Andrey Sergeenkov: Do you have any thoughts on the top DeFi Projects on the market today
Victor Larionov: Multiple projects have proven to be incredibly successful over the past few months. Projects such as Maker, ChainLink, Band Protocol, and others have made a lot of headlines
In the case of Maker, it has attracted over $1.42 billion in value locked through its lending platform. Users earn income for providing liquidity to the lending pool, Its MKR token has a market cap of over $573million, a neat increase of 26.9% for the year. MKR is a governance token to vote on different proposals, including debt ceilings, stability fees, and so forth.
ChainLink has been the best performer in 2020 so far. The project provides decentralized data roacles, which have been integrated into various DeFi platforms and exchanges for price information.
In the past year, the LINK value has risen by 631.9%, catapulting its market cap to nearly $5.9 billion. LINK tokens are used to pay node operators for retrieving data for smart contracts. Tokens can also be used for deposits by node operators if contact creators have this requirement.
Band Protocol is only now starting to hit its stride. Similar to ChainLink, it is a scalable decentralized oracle, but one that is blockchain agnotis. The BAND token has gained 242.6% in value in the past year, resulting in a market cap of $267.5 million. Its native token can be used to stake for validating data submitted through the platform. This ensures no “bad data” can exist on the protocol at any given moment.
A more recent example, called MantraDao, also struck a chord. After a successful launch, its native OM token successfully surged to a market cap of over $68 million. This community governed DeFi platform provides financial control to those who want to grow wealth together. Platforms like these are exciting for the entire industry, as they raise the bar by a significant margin.
Andrey Sergeenkov: Which of these projects are you most impressed by and why?
Victor Larionov: Personally, I think that Kava has a tremendous amount of potential. it is a DeFi platform focused on liquidity through top crypto assets, including Bitcoin and XRP. Moreover, it has noted significant interest from Binance Coin users, as BNB was the first supported asset.
Through Kava, users can achieve a high yield on their cryptocurrency portfolio. This can be achieved through community-built applications. One is the native Kava app, which can be accessed through a regular browser. There is also frontier, an intuitive wallet for interacting with Kava on Android or IOS. Furthermore, Cosmostation is a feature-rich mobile wallet to manage one’s Kava account.
The protocol has also undergone not one, but three major audits. This further ensures the project is as secure as possible. Kava also has the backing of major giants, including Binance, Ripple, Huobi, OKEx, Kraken, and others. It has also won the Binance Launchpad Project of the Year Award 2020, and Kava has been referred to as the “Uber of Bitcoin”.
By providing liquidity through supported assets, users can mint the USDX stablecoin. This stablecoin is native to the Kava platform and can be staked for extra rewards. USDX works in conjunction with the KAVA token. The latter token is a governance token, which is staked in bonding curves of network validators.
Currently, one KAVA is valued at over $4, and was sold during the IEO for a price of $0.3 each. The project has a market cap of $111 million, making it a hidden gem in the DeFi space. Binance Coin holders have been actively minting USDX through the BNB pool, forcing the Kava team to keep increasing the limit of the pool accordingly. There is a genuine interest in this project, and one that will keep increasing once more assets are supported.
Now that Binance.com has officially integrated Kava’s functionality into its exchange, the overall liquidity will increase by leaps and bounds. It is the first DeFi platform to be integrated into this exchange, further highlighting the importance of decentralized finance as part of the technology and cryptocurrency industries.
Andrey Sergeenkov: Which DeFi applications will have the most potential?
Victor Larionov: Due to the nature of decentralized finance, it is only normal that monetary banking services will be successful. Current services being explored include borrowing & lending, missing stablecoins, offering insurance, and decentralized marketplaces. While all of these concepts are already being explored, they still have a lot of room for future growth.
The main benefits of DeFi in the monetary system are the instant settlement of transactions, much-needed transparency, removing intermediaries from the equation, and empowering the user, instead of the service provider. All of this will significantly enhance the ease of access for those who otherwise may be unable to access any financial services.
Our society lives in a modern world that requires modern solutions. As far as financial services and products are concerned, they are primarily designed without the current generation of technology in mind.
As more innovative technologies begin making their mark on the industry, financial products and services will need to evolve accordingly. DeFi embodies this era of change, innovation, and inclusivity.
The concept of autonomous and distributed financial services is somewhat experimental and volatile at the moment.
There is currently a conscious attempt by the new crops of DeFi solutions to create improved infrastructures that would make DeFi more inclusive. This trend has spurred the creation of bridges between…