Crypto Veteran. Tokenization, DeFi and Security Tokens - Blockchain.
Ishan Pandey: Hi, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind BXTB?
Nigel Hughes: I got my first bitcoin in 2011 and being a software guy already. I was interested in how it all worked. I was later engaged with a number of crypto startups and blockchain projects in my region before meeting the team behind BXTB. This was a new type of project with a strong focus on environmental sustainability
Ishan Pandey: Tell us about the idea of yield-based stablecoin and its use cases? Answer:
Nigel Hughes: Stable coins are an essential building block of the DeFi concept and have helped us to make decentralised exchanges a reality. Decentralised exchanges need a mechanism to attract liquidity, or else they will remain unused and unnoticed. The more liquidity a dex has, the more stable it will be, ie. it will be able to fulfil larger trades with relatively little slippage. Slippage is the price change that occurs when the dex rebalances itself after a trade.
One way to do this is to provide a financial incentive and an easy pathway for liquidity providers to take part. These can be anybody at all and should be able to stake and unstake their crypto quickly and without formalities or approval. The liquidity providers are rewarded with a share of the transaction fees that accrue whenever a trade is executed on the exchange. The yield can be calculated continuously and is usually paid out in the form of a yield dedicated token that may be traded on secondary markets and may cover governance or voting rights to decide the project's future.
The regulations are coming for Stablecoins and the fact that Tether is storing more than 56$ in reserves in assets that not safes and AAA or at least in the premium of the tranches is going to be a financial disaster for crypto. Tether has always operated in a non-transparent manner and this is going to have long term effects. The Congress and Department of Justice have also long indicated that the conduct of business by Tether is not up to the industry standards.
Ishan Pandey: According to you, how will enterprises utilize stablecoins in their operations?
Nigel Hughes: Stable coins are an emerging payment rail that will give traditional payment service providers, such as PayPal, banks and credit cards, stiﬀ competition. Although they are used mostly to hedge against price volatility in crypto trading, we now see evidence of stable coins being used for digital commerce, especially for cross-border and high-value transactions. Convenience, speed and low fees here will catalyse change with consumers being the major beneficiaries.
In this sense, stablecoins have a role in making payment services more eﬃcient for everyone. But the industry needs legitimate stablecoins providers who are not shady and have a proper license like a banking charter. This is a highly regulated activity as you are printing money from thin air and what Tether has been doing for the past few years has red flags marked all over it.
Ishan Pandey: Yield generation stablecoin is a new concept in DeFi. What can be its potential use cases in the gaming industry?
Nigel Hughes: DeFi fills the needs of the market for savings and investment products. Gaming fits this model because of its ability to generate consistent investor returns which are underwritten by a sizeable and growing industry turnover and high transaction volumes.
Good, long-term investments tend to be backed by real cash flows. I believe online gaming is just the vehicle for supporting the proliferation of DeFi as a whole.
Ishan Pandey: According to you, what are the potential reasons behind the current bitcoin rally? Further, what does it mean for the ecosystem?
Nigel Hughes: Many will speculate about the reasons for market trends. Right now there is speculation about institutional investment in crypto and in the case of bitcoin, acquisition by large corporations. Indeed the events of the past week have seen a distinct reversal of this trend. We’re all welcome to have our own opinions about what is driving it and where it will lead
Ishan Pandey: According to you, what smart contract development and auditing practices should be in place to ensure smart contract resilience against cyberattacks?
Nigel Hughes: Open-source software has brought about a sea change in the development community. The idea now is not that you get paid for writing software and jealously guarding it will the eﬀort of copyright enforcement, bug fixing and customer support, but that you encourage a bunch of people like yourself to write software that makes money for everybody and can reside and flourish in the public domain, ready to be scrutinised and improved by all.
These systems are designed to be as simple and transparent as possible. Wherever money is involved, there will be a thousand eyes looking for potential points of failure or indeed possible weaknesses to be exploited. The more eyes and the longer a system runs smoothly, the greater will be the trust and acceptance
Ishan Pandey: According to you, what future trends are we going to see in the DeFi and blockchain gaming industry for 2021?
Nigel Hughes: In 2020, DeFi adoption was held back by network capacity limitations. Now we see networks getting faster and more aﬀordable, driven by technology upgrades and migration to new platforms. With better performance and lower fees making it much more accessible to everyday users. This sits well with the uptake of online gaming based DeFi projects, which benefit from having more users and an increased number of transactions.
The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Ishan Pandey, legal researcher at Karm Legal Consultants.
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