Anndy Lian, Chairman of BigONE Exchange gave a speech at the American Digital Week event on 19 October 2021, 13:00 – GMT. His topic is about ‘Decentralized Finance – What are the Opportunities?’
The following is the summary of his speech.
This is a fantastic time to be in DeFi, driven by short and long term drivers from the explosive growth of the NFT market overtaking DeFi, the new breed of play-to-earn games or GameFi, to rise of the ‘metaverse’ as the next big thing, there’s also a lot to unpick which is exciting an a little daunting if you are new to it.
But let’s start with some basics for those of you new to DeFi. A decentralized finance (DeFi) system allows people to create financial products or “smart contracts” that execute actions automatically on the blockchain – without any bank, brokerage, exchange, or corporation acting as an intermediary.
At the end of July 2021, the market capital for DeFi products was hovering near $80 billion. While that was down from its May peak of more than $89 billion, pundits believe growth will continue in the coming year as DeFi projects mature. Key to that maturity process is innovation DeFi – creating opportunities to profitably shape a decentralized future you’ll be sure to want to be a part of.
Let’s start with non-fungible tokens or more commonly known as NFTs. The NFT industry has exploded in popularity this year. There was more than $2.5 billion in sales volume during the first half of 2021 and it has only accelerated since then. OpenSea, the most popular NFT marketplace, saw more than $3 billion in NFT sales volume just during the month of August.
So what’s driving this demand in NFTs? The fact is that digital natives would rather own digital goods than physical goods, which means that we are watching the digitization of the collectibles industry. These digital natives want to use the NFTs as a way to play games, transact with each other, and generally recreate the collectibles industry. Another perspective, as outlined recently by popular crypto podcaster Pomp, is that we are watching the birth of a new type of status:
“Each individual that would normally drop $50,000 to $1,000,000 to purchase a car, watch, house, boat, etc is now realizing that you can spend the same money on a digital good and flex in front of more people on the internet. Only so many friends can check out your house and be impressed. But millions of people a month will see your Twitter avatar. These NFTs are a great example of where I would expect billions, if not trillions, of dollars to be made in the coming years.”
As Pomp says, just as every business had to figure out an internet strategy in the 1990s, every business is going to have to figure out their bitcoin strategy and every business is going to have to figure out their NFT strategy as well.
Speaking at the recent Paris ETH event EthCC Ben Lakoff, co-founder of NFT-protocol Charged Particles highlighted NFTs as in-game items and in the metaverse as examples: “There’s actually a new publicly traded exchange-traded fund, META. In your brokerage account, you can now get exposure to the metaverse plays that are publicly traded.”
Talking of the metaverse just a few weeks ago Facebook CEO Mark Zuckerberg said within five years Facebook would be a “metaverse company” while Satya Nadella, Microsoft’s CEO, said they were investing in the “enterprise metaverse.” Simply put, whoever can integrate NFTs and payment with the metaverse may well lead the biggest change in online culture and economy since the birth of the web in the 1990s. A view supported by David Raszucki, head of the $50 billion Roblox Corporation, who sees the emergence of the metaverse as profound a shift as the invention of the internet and the world wide web.
In a close fit with the vision of an open metaverse, play to earn crypto games are built on the fundamental need for a place that is available to everyone and owned by no one in particular. An amalgam of gaming and decentralized finance (DeFi), ‘GameFi’ refers to the intersection between blockchain-based gaming and decentralized financial instruments in all their guises: yield farming, lending/borrowing, algorithmic stablecoins, token minting instruments, etc.
“Crypto has been looking for a mass market use case,” Andrew Tu, an executive at quantitative trading firm Efficient Frontier, told CoinDesk. “Gaming is a sector that people have been hyping up for a long time. It’s the first area of crypto where the average Joe without a huge understanding of crypto or blockchain can participate.”
This rise in popularity of GameFi and associated tokens has captured the attention of the wider crypto market, especially in the longer-term trend of NFTs and the metaverse. The fund’s goal is to support developers and create GameFi projects by building decentralized finance (DeFi) content, the foundation said in a press release.
“GameFi is going to be the next big thing that makes the DeFi, NFT and the larger crypto space easy to understand and be involved in,” said Sun.
A striking example of how the rise of GameFi is driving the value of tokens came in early August with Axie Infinity, the popular crypto gaming platform on Ethereum, which raked in more than $220 million in revenue in 30 days to early August, making it the top revenue generator among all DeFi protocols and blockchains, Ethereum included, according to data from Token Terminal.
Not surprisingly this phenomenal price growth has caught traders and crypto market watchers’ attention. News BTC said, “Axie Infinity has been on an absolute tear lately. The play-to-earn platform has become the face of a new integration of crypto and gaming that holds unbelievable potential. Axie Infinity has surpassed 1M daily active users and is generating more revenue than any protocol or platform with the lone exception of Ethereum. Yes, Axie Infinity is yielding more fee revenue than major platforms such as OpenSea, Uniswap, Bitcoin, or the Binance Smart Chain.”
One of the key problems associated with such rapid growth in the DeFi ecosystem is the increasing transaction costs, particularly the rapidly increasing Ethereum gas fees. To address this issue, many projects in the crypto space are starting to offer cross-chain functionality. One of the most successful innovators in this space has been Polkadot. The price of the Polkadot governance coin (DOT) has risen to over $30 from under $10 in August. This puts DOT’s market cap at over $30 billion, about the same size as Ethereum a year ago. Also worth noting is the rise of Solana, recently listed on BigOne exchange, another ‘Ethereum-killer’ with lightning fast transactions at a fraction of the price. The rapid increase in value is largely a result of crypto gaming and successful NFT launches. Amid a huge NFTs sales, resulted in a bull rally of the Solana and the price of its token SOL which, trading at $1.60 during the start of January, smashed its all-time high (ATH) $194.82 on September 7th, 2021.
The full video can be obtained at:
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.