"We have a long way to go and that’s what makes the DeFi space exciting." - Adrian Peng

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

Adrian Peng: Hi Ishan, thank you for inviting me to the “Behind the Startup” series. My name is Adrian Peng, and I am the CEO of Cook Finance. I graduated from UC Berkeley and have worked for Oracle, C3.AI and Google previously before starting Cook. What attracted my co-founder Cage and me to create a new protocol in the DeFi space was that as DeFi infrastructures like Uniswap and Compound became more mature in 2020, we thought it was the perfect time to create a protocol that would help drive the transformation of the traditionally centralized asset management industry to a decentralized version.

Ishan Pandey: In recent times, one of the most common applications of blockchain technology and cryptocurrencies is Decentralized Finance (DeFi). How can DeFi be made more accessible to users around the world?

Adrian Peng: DeFi, while very popular in the crypto world, is a term that doesn’t have much awareness in the general public yet. To broaden the reach of this exciting technology, we need to make it easily understandable and, more importantly, communicate the benefits of this technology for the evolution of finance. Only then will DeFi begin to progress along the technology adoption curve that all new platforms go through.

Ishan Pandey: Most of the time, DeFi platforms lack the resources needed for experienced fund managers to implement their strategies in the crypto industry, leaving out an important community of people who could use them. How can we make way for convenient access to asset management without sacrificing the quality of the tools that professionals can use?

Adrian Peng: The great thing about DeFi is that the protocols being built today are largely created with the input of each respective community. So if fund managers have specific requests or tools that they would like to use they are most welcome to suggest them within the communities they actively participate in and there’s a high likelihood that they’ll be integrated into new versions of the platforms. That’s what really makes Decentralized Finance great and unlike any other form of finance, we have seen in the industry’s history.

Ishan Pandey: Cook Finance is building a cross-chain asset management solution for crypto investors. Can you explain how cross-chain asset management protocol works?

Adrian Peng: Cook Finance will be deployed to multiple public chains, including Ethereum, Binance Smart Chain (BSC) and Huobi Eco Chian (HECO). Fund managers are free to choose a preferred chain to initialize and manage their funds. Investors can invest crypto assets to a particular fund in exchange for LP tokens, representing partial fund ownership. The LP token or ckToken, is a fungible asset to each fund and can be exchanged among investors or redeemed for its underlying assets within the fund, similar to a share in the stock market. Powered by cross-chain bridge technologies like PolyNetwork, LP tokens can be transferred between different public chains, which gives investors exposure to the assets existing in different chains. For example, a fund manager can create a BSC index fund which consists of BSC project tokens like CAKE, and BUNNY. Investors can invest crypto assets to this fund to issue LP token ckBSCI, which can be bridged to Ethereum or HECO via PolyNetwork. Fund managers on Ethereum and HECO then can purchase the bridged ckBSCI to give their fund investors exposure to the BSC projects easily. In general, Cook facilitates composability and interoperability of funds on different blockchains.

Ishan Pandey: Users pay gas fees to compensate for the computational power needed to process and verify transactions on the Ethereum blockchain. How can gas fees be mitigated while also allowing access to the broadest range of assets, lending facilities, and yield sources possible?

Adrian Peng: Yes as we all have recently experienced on the Ethereum blockchain, gas fees are becoming more of an issue and we unfortunately don’t see this going away any time soon. That’s the beauty of a platform such as Cook, where once you hold our tokens, you basically can share gas fees among a large group of other people who hold the same fund as you, thereby distributing the gas cost to a larger base but having a broad range of access to all different types of funds.

Ishan Pandey: Please tell us a bit about how protocol transparency and security are maintained when users manage their assets cross-chain?

Adrian Peng: Proper permissions are assigned to fund managers to ensure the security of the funds in smart contracts. As a result, ckToken holders own the underlying assets in the respective fund, while fund managers can only allocate funds to whitelisted DeFi markets. All fund managers only have trading access to fund smart contracts and do not have any withdrawal permissions. All fund transactions are on-chain, so investors can easily check the fund performance history and activities.

Ishan Pandey: The Digital Asset Management Market is reported to witness high demand during 2020-2027. What do you think is the future of the digital asset management industry?

Adrian Peng: The transformation of digital asset management is only in the first inning right now. We have a long way to go and that’s what makes the DeFi space exciting. As we create better and better protocols collectively, we’ll quickly see which ones become the leaders through sheer community member size and this will dictate the direction in which the future of digital asset management goes. So while we see a bright future, it’s still, in the end, the community’s choice in which areas to develop in this rapidly evolving industry.

Ishan Pandey: How does on-chain-oracle pricing work? Further, what steps are taken to ensure there are no black swan events?

Adrian Peng: Cook uses multiple oracle services such as Chainlink, Band Protocol, Uniswap Oracle, and so forth to get asset pricing data. An aggregating smart contract will validate and reconcile data from multiple sources, preventing a single point of failure problem that an off-chain oracle solution faces when it becomes faulty or compromised.

Ishan Pandey: What new developments can we expect to see in the digital asset management space in 2021?

Adrian Peng: Even though most development is currently on the Ethereum blockchain within the DeFi world, gas prices have been a severe limiter to continued growth and adoption. Because of this, many protocols such as ours are exploring cross-chain and layer 2 solutions. Likely we’ll continue to see this sort of collaboration and interoperability grow in 2021 due to these gas constraints, which is suitable for developing the overall ecosystem.

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.