DeFi Applications Will Determine the Future of Financial Markets

Ishan Pandey: Hi Nikola Stevanovic, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind Attrace?

Nikola Stevanovic: My name is Nikola Stevanovic, originally from Belgrade, Serbia, now living in Amsterdam. My background is in economics and finance. I studied in the US while also playing varsity basketball. After university, I worked for a couple of large banks in the US before moving into product management roles.

Eventually, I ended up in Amsterdam, where I have been living for more than three years now and working in various startups. About 1.5 years ago, I got recruited to focus on product and strategy for Attrace. I have been a blockchain enthusiast for many years; therefore, I was thrilled to be part of a project that operates at the forefront of innovation in the blockchain space.

Ishan Pandey: Please tell us a bit about the blockchain-based referral protocol and how it exactly works?

Nikola Stevanovic: We are building a blockchain-based referral protocol based on a distributed network that acts as an advertising oracle for Web3. The referral network is operated by verifier nodes which we also call the advertising oracles for Web3 for the less technical audience. It is the world’s first trustless and decentralized referral network of that kind. The network facilitates on-chain referrals, allowing crypto projects to incentivize third parties to promote them.

Those third parties can be individuals or websites, and they are rewarded for bringing users to crypto projects and dApps. The rewards are in the project’s native crypto and are only paid out for the actual usage of the protocol or dApp (fully performance-based). The verification of those referrals is done by the verifier nodes, which ensures the trustworthiness of the network.

The purpose of building a referral protocol on the blockchain is to create advertising infrastructure for Web3 applications. With Opensea, Uniswap, and other major DeFi and NFT applications building the future for the blockchain industry, it is critical to build advertising infrastructure that integrates with Web3 applications.

Ishan Pandey: We read this is the world’s first, but we already see advertising in the blockchain space?

Nikola Stevanovic: Surprisingly enough, even solutions from the decentralized space are reminiscent of the traditional ones, where promotions are still centrally managed within siloed referral campaigns scattered across the ecosystem and blockchains token holders and crypto projects.

To our surprise, we still see multiple solutions which under the hood still work in a centralized manner with e.g., cookie tracking, fingerprinting or solely via one blockchain network. We strongly believe a solution is needed which is more aligned with the basic principles of the blockchain economy. A standard that works in a truly trustless and decentralized manner for any asset on any blockchain.

Ishan Pandey: The idea of decentralized finance is now being recognized as a critical shift in the way financial markets operate. In what ways has DeFi affected the traditional financial market, and how has it impacted the industry as a whole?

Nikola Stevanovic: We believe there is a fundamental shift in how the financial markets will operate in the future. We have seen now that the capital markets can function without requiring any central authority or a middle-man. Also, DeFi provides an entrance to capital markets globally to those who would not be able to access it otherwise. These are still early days, but we believe that much more capital will move from traditional finance to DeFi.

Ishan Pandey: In today’s time, the DeFi ecosystem has enormous potential and is growing as more value is injected, but it is fundamentally limited due to the high entry barrier. How can this issue be addressed and resolved?

Nikola Stevanovic: I would actually argue, on the contrary, that there is a high entry barrier with traditional finance where only certain countries, businesses, and individuals have access to the capital markets. DeFi allows anyone with internet access to participate in the financial system regardless of their location or status. This also brings different challenges, but I would not say that a high entry barrier is one of those.

Ishan Pandey: Decentralization is frequently associated with ideals such as decision-making involvement, democracy, equality, and liberty from the central power. According to you, will we soon witness the mass adoption of blockchain technology across all sectors due to the factors mentioned above?

Nikola Stevanovic: We certainly believe that a big part of the digital economy will move over time to blockchain and Web3. With DeFi we have seen that finance is making big moves in this space. We are now seeing a similar trend with art and gaming via NFTs. We are yet to see which sectors are going to be next. Obviously, we believe at some stage it will be online advertising. We believe this is an inevitable transition, and it is also a bet that Attrace is making on the growth of the Web3 economy in the future.

Ishan Pandey: As someone who has been in the crypto industry for quite a while now, what will be your advice to beginners and inexperienced crypto holders who want to start storing coins securely and partake in the crypto industry?

Nikola Stevanovic: For beginners and inexperienced crypto holders, the advice would be to do their research first and understand everything about the project before they invest in it. At the same time, be alert to scammers - there are a lot of scam projects out there, and they are getting more and more sophisticated, and the best way to discover that is by doing your homework thoroughly before investing.

Ishan Pandey: Despite fears of it being a fad, NFT sales volume increased by about 200 percent in the first half of 2021 especially compared to the first half of 2020. What has led to this sudden boom?

Nikola Stevanovic: NFTs are driving mainstream adoption of blockchain technology with much interest from people who were not previously involved with crypto or blockchain projects. The main reason, in my opinion, is that these early adopters find NFTs extremely exciting and intriguing- there is powerful gaming feel to it. Also, it seems that the NFTs have that viral effect we have seen with social networks.

Ishan Pandey: China recently intensified its stance on cryptocurrencies by imposing a blanket ban on all crypto transactions and mining, putting immense pressure on bitcoin and other prominent coins as well as crypto and blockchain-related companies. What will be the global implication of this nationwide ban?

Nikola Stevanovic: These policies can perhaps have a short-term impact on the growth of cryptocurrencies but would not expect a long-lasting effect. Unless there is a coordinated action with the aligned blockchain/crypto policies among the leading countries in the world, it would be hard or almost impossible to ban crypto transactions and mining activities altogether. China banning crypto transactions and mining is an opportunity for other countries to establish themselves as leaders in the space, and I think we have already seen this trend recently.

Ishan Pandey: In what ways do you think Covid-19 has affected decentralized finance and what has been the overall impact of the pandemic on global finance?

Nikola Stevanovic: Covid has triggered some hefty quantitative easing within many western countries. Perhaps this has increased the fear for inflation, which increased the interest for crypto and, therefore, crypto-related propositions.