Liquidify is the world’s first liquidity accelerator for long-tail crypto assets. In this interview we talk to Max, a core team member, about his personal background and his journey into the crypto world, how the idea for Liquidify came about and Liquidify’s exciting future plans.
You can find part I of the interview here.
In the future, you would like to include even more classes of long-tail assets such as NFTs, security tokens and also make traditional financial products such as stocks, loans and bonds tokenizable. Can you tell us a little about that?
Well, of course, standard fungible crypto assets are only the first step. In fact, every market needs liquidity and so can benefit from our protocol. The next step will certainly be NFTs. Some NFTs are liquid, but most are not really. For example the CryptoKitties, which were very popular in 2017, who else will buy them? This can be a convenient way for some NFT holders to turn their NFTs into liquidity.
The inclusion of traditional assets such as stocks, bonds, etc. is a little further drawn out. These must first be tokenized in order to be included in the log. We are not going to tokenize these assets ourselves, but our goal is to add these assets to our asset pool. Not only is that up to us, but we anticipate that over time, more and more of the traditional assets will move to on-chain. In the long term, we want to build financial instruments that can be used beyond the crypto market.
This could be a big advantage over projects that “only” focus on the crypto market, right?
Definitely, and I think it could also be an advantage over traditional funding. In my opinion, there will be a new generation of high-lean crypto-native companies that will conquer traditional industries with their higher capital efficiency and lean corporate structure alone. You can see that in companies like Uniswap, for example. The small decentralized exchange Uniswap has maybe 20 employees, but about 2/3 of the daily trading volume of Coinbase with more than 1200 employees!
At some point, these new crypto companies will move more and more into traditional areas if regulations allow. Difficult to say if this could prevent certain assets from being listed. But anyway, I think these new companies and protocols will start in crypto and quickly expand into traditional markets.
Basically, this also corresponds to our long-term goals: We want to expand into the traditional market, building on crypto as a foundation.
After the introduction of Protocol 3.0 you are conceptually aiming for a complete DAO, why?
We value the community and think that for any credible DeFi project it is very important to enable the community to participate in governance or at least to listen to ideas and contributions from the community. A DAO is simply the most efficient way to balance the interests of the community and various stakeholders and to ensure that community decisions are implemented.
LFY holders benefit from their voting rights on important development decisions and also have the right to propose completely new use cases for LFY. We see this token as much more flexible than LAT – in terms of utility.
Is this comparable to voting shares held by traditional shareholders?
Yes, it’s a similar principle. Giving the token holders, who are kind of shareholders of the protocol, the opportunity to make decisions is a better way for us than just letting the development team make the decisions alone. Cryptocurrency is always about the community. There are several other potential benefits of leaving certain decisions to the community. For example, the decision as to which assets should be included in the log together with the token holders. In general, I think that the wisdom of the masses in this case is much stronger than the opinion of individual experts.
What do you think the future of DeFi / Blockchain / Crypto looks like? Where do you see Liquidify in 2, 3 and 5 years?
That is a very broad question. For the crypto space in general, I think it has a very bright future, albeit with many ups and downs. The biggest question mark in my opinion is regulation, which means how crypto is regulated and how easy and convenient it will be for the traditional financial world to deal with crypto. In my opinion, there is still a significant risk that cryptocurrency as we know it will fall victim to its own success, which means that governments and incumbents could try to restrict and control it. But whether we have the currently loosely regulated anarcho-style crypto market or a tightly regulated market, crypto is certainly not going to go away.
As for Liquidify, I hope that we can become a major pillar of the DeFi ecosystem, just like Compound, Synthetix, YFI, and others, by expanding the current set of tools available to investors. Another important step will be to expand beyond the current crypto market, as already mentioned, into the traditional financial sector and to combine the two. I think that is an even more important task, but it is also a much greater challenge.
We want to fully implement our protocol in three stages within a year. We can become a major player in DeFi within two years. In three to five years we can move beyond cryptocurrency to traditional finance. This makes the most sense, as by then it will also add more tokenized assets to the current infrastructure and expand the way traditional finances can interact with DeFi. We are already seeing such steps at Compound Treasury and others.
What else would you like to give the BeInCrypto readers?
Investing in crypto is inherently risky, there is no doubt about that. But with any investment there is always a risk / benefit calculation, so is the potential gain worth risking my capital?
Personally, I made an early decision that I don’t mind losing 100% of $ 100 if there is a chance of making it into $ 1000 or even $ 10,000. And that actually happened to me, both when losing and when winning. So what I would like to say in relation to Liquidify is: Of course, as with any (crypto) investment, there is a risk and it is also a very early project, but there is also enormous potential for growth.
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