For the 22nd part of Unhashed, I reached out to Nathan Keller, the lead developer at Optimus Venture, a community & crowdfunding investment platform for blockchain and crypto projects. So, let’s dive into his insights about the DeFi and crypto space.
Q1. Welcome to Unhashed. What’s your crypto story and what led you to start working on Optimus Ventures?
Answer: We’ve been running a private crypto investment group for over four years now and during this period we’ve seen firsthand the complicated relationship between DeFi investors and businesses. Given the novel nature of this industry, investors are still skeptical about future DeFi projects. There’s always a possibility that the project they invested in will turn out to be a scam or fail to perform and this essentially drives them away from the industry.
From the point of view of businesses, this makes it hard for them to raise funds for the development of the project, and even if they do find investors, the possibility of a pump and dump episode can never be ruled out. This kind of complicated relationship between investors and businesses in DeFi has choked many promising projects into oblivion. And, having seen this for so long, we wanted to create a better way to connect projects and investors, and that is how Optimus was created.
Our primary goal with Optimus Ventures is to help raise promising DeFi projects that can contribute to the growth of the industry and add value to the community of investors. All of our projects are carefully vetted to evade the possibility of a scam and our proprietary smart contract ensures that investors are protected. With such measures in place, we hope to improve the complicated investor-business relationship in DeFi and ensure that promising projects have a fighting chance for success.
Q2. Raising funds in a KYC-compliant way is a tough ask. Given the fragile regulations in place, how viable is crowdfunding for crypto/DeFi businesses?
Answer: Projects launching on the Optimus platform have the liberty to decide whether or not they’d like a KYC. Our role is to connect investors with promising projects, but the project developers are the ones launching the sale smart contract and it can be tailored to suit their needs.
Regarding the liability of crowdfunding, DeFi platforms have more or less revolutionized it in recent times. When compared to other ways of fundraising, crowdfunding on DeFi offers transparency, a reliable infrastructure, a good reward system, and security above all. Yes, the regulations are fragile but given that DeFi’s crowdfunding platforms are based on the blockchain, the security risks are minimal. Moreover, on platforms like Optimus where projects are vetted for reliability and potential, the chances of fraud of greatly reduced, and crowdfunding could be the most feasible means of fundraising for emergent projects.
Q3. What are the advantages that Optimus Ventures stands to reap with the unique 2-way vesting implementation?
Answer: We believe that two-way vesting is the key to improving the relationship between investors and businesses in DeFi. It has numerous advantages for both sides. In two-way vesting, investor assets are locked in a smart contract on our platform. If the project does well to succeed, they project tokens strategically released in fixed time periods.
However, if the project goes south, investor assets are still safe and will be returned to them. This minimizes the risk involved with DeFi investing and allows investors to be protected through the whole ordeal.
Q4. What is the viability of evaluating investor behavior? With several variables in play, can investor behavior be a benchmark for accessing investment opportunities in the crypto or DeFi space?
Answer: When you work at a crypto investment group for as long as we have, you’ll know how poor-acting investors can hurt promising projects in the DeFi space. In doing so, they not only thwart the chances of the project’s success but only take away investment opportunities from reliable investors.
In this regard, having a gauge of investor behavior in the past will give projects an edge, letting them evaluate and work with reliable investors who can actually contribute to the project’s growth. We believe that investor behavior should absolutely be an important metric for accessing early-stage investment opportunities. This will help not just the projects but also genuine investors building projects.
Q5. Please elaborate on the concept of 'dynamic allocations' and how that transpires into reality during raising capital.
Answer: At the core of the dynamic allocation system is the HODL score that takes investor data from past token sales, and uses it to determine future token sales allocation. The score is based on how many tokens were sold over a period of time since TGE.
Another component is allocation usage. A member that does not use the allocation he was given in past sales will get less allocation in future sales. The third component is the percentage of $OPTCM tokens held compared to others in that sale round.
So in reality, when there is a new project in Optimus, investors have the ability to express their interest to invest. Once the interest stage is over, the system will automatically calculate individual allocations based on the total allocation and after implementing the dynamic allocation algorithm. What should happen as time goes by, is that dumpers will get less allocation in new projects.
Q6. What safety measures are a must for investment protocols and DeFi platforms to adopt in order to protect investors in a dynamic space as crypto?
Answer: DeFi platforms have become an easy target for hackers in recent years. They have left no stone unturned to exploit bugs and smart contract code vulnerabilities to pocket billions of dollars worth of assets. This is why it is important for DeFi platforms, especially launchpads to go the extra mile to ensure the safety of investor assets.
A full performance and security testing of the protocol can be conducted to ensure that there are weak links that hackers can exploit. Additionally, smart contracts can be audited by renowned security firms like Certik to ensure that they are safe to deploy. Measures like this, though time-consuming at the beginning, can help secure the protocol and retain users’ trust by safeguarding their assets.
Q7.How do you view the future of crypto and DeFi investments in the context of taxes and other regulations?
As crypto and DeFi industries are slowly making their way towards the mainstream, conversations around regulation are emerging. Coinbase’s recent tiff with the SEC is a clear sign that regulators are finally considering DeFi. There is a good chance that in the coming years, most countries will clarify their stance on cryptocurrencies and some of them have already shown the willingness to classify them as an asset class.
In such a case, the returns on crypto investments can become taxable and investors definitely need to keep this in mind. But on the positive side, this means official recognition from the world governments which can increase user trust and make DeFi more appealing to a wide variety of people.
Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about projects innovating using blockchain and cryptocurrencies and share it with the community. The writer does not have any vested interest in any of the projects covered herein. Not that this article shares any, but still, taking investment advice from strangers on the internet is not a wise thing to do.