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TBW Premium #9: MakerDAO's ambitions, Ledger's fund...

TBW Premium #9: MakerDAO's ambitions, Ledger's fund...

Read all about The Big Whale's 9th Premium newsletter.

Hello Whales and welcome to the new kids who've just joined us in the Web3 deep end! 👋

THE BIG SPLASH

Long live the bear market!

How can you escape it? For the past few weeks, hardly a day has gone by without some analyst, commentator or investor (when it's not your uncle) talking about the "bear market". It's true that the crypto markets have lost just over 50% since their November peak. It's also true that some major groups have postponed their NFT or expansion projects in crypto.

But has the sector come to a halt as a result? Not in the least, and those who were already interested in the subject in 2013 or 2017 know this well: it is in these gloomy periods, when attention is no longer focused on prices but on technology, that everything is built. After winter, comes spring!

In any case, that's the bet of thousands of players in the sector like Ledger, MakerDAO or our Belgian friends who are organising their first Brussels Blockchain Week from 20 June (we're offering five places in our Discord launched last week and accessible to annual subscribers and founders).

Last but not least, it's also the bet of The Big Whale! In fact, we'll be delighted to toast this evening at Station F with those registered for the event (sold out). 🍾 PS: there will be others.

THE BIG NEWS

Our exclusive news

👉 Request Finance raises €5 million

Any company that has ever paid or received a payment in cryptos knows what constraints this can represent. Particularly when it comes to managing invoices and checking transactions after the event! French start-up Request Finance understands this and has been offering an all-in-one solution for invoicing and payment in digital currencies since 2020. The system is quite simple: the company or freelancer connects its wallet to the platform, which will manage the payments between the parties and all the invoicing. More than 2,000 companies are already using its services. This success has not gone unnoticed by investors such as Balderton, XAnge and Animoca Brands, who have just invested €5 million in the French start-up. "Some of our customers are industry giants such as Aave, Fantom, Polygon, Decentraland and The Sandbox", explains CEO Christophe Lassuyt. With this fundraising and additional resources, other "giants" could quickly follow.

👉 The AMF (finally) decides to regulate lending and staking

It's a change that has gone rather unnoticed, but which says a lot about the consequences of the collapse of the UST on part of the French ecosystem. On 1 June, the Autorité des marchés financiers (AMF) 'updated' its doctrine, stating that staking and lending activities (which involve working clients' cryptos in exchange for a return) were now akin to digital asset services... When questioned by The Big Whale at the beginning of May, the AMF had nonetheless indicated that it did not wish to intervene on the subject. But the scale of the affair seems to have prompted it to take action. From now on, companies offering this type of service could be required to register as a Digital Asset Service Provider (DASP) with the stock market regulator in order to operate in France. According to our information, the AMF has also summoned the various PSANs to unveil their offers of returns on cryptos. A source close to the matter criticised the lack of transparency on the part of certain companies. Some would not hesitate to venture into particularly exotic and risky investments.

THE BIG STORY

Mariano Di Pietrantonio (MakerDAO): "We want to become the world's leading credit provider"

👉 The news. In Argentina, we met one of the architects of the MakerDAO protocol and its stablecoin dollar DAI.

👉 The background. The collapse of UST highlighted the virtues of its decentralised system.

👉 Why it matters. MakerDAO provides DAI loans to make up for the banking sector's inefficiency.

The Big Whale: You're one of Argentina's crypto figures. When did you get started in the sector?

Mariano Di Pietrantonio: It all started with bitcoin in 2011. At the time a friend told me "you should buy some". Since I'm a bit curious, I looked into it, but at the time I didn't understand what it was, so I passed on it. I'd studied 'classical' economics at university, so I thought there was no point, that Bitcoin was just what you hear all the time, i.e. machines that consume a lot of electricity. In 2011, hardly anyone was talking about Bitcoin, it was a fairly confidential subject. There weren't thousands of videos on YouTube explaining how it worked, and the big magazines weren't talking about it. You could only find information on obscure forums.

When did it all start to click?

It took a while. I saw bitcoin pass the $5 mark, then the $10 mark, then the $20 mark, then the $100 mark, and I thought I had to understand what it was all about. The big breakthrough came in 2014. I remember it was one morning, I was making myself a coffee, I was on my computer and it was like a huge blow to the head. Everything I'd read about Bitcoin suddenly fell into place, as if by magic. I realised that Bitcoin and cryptos were going to change everything. I quit my job as a developer and started going to all the crypto events to meet other enthusiasts. That's when I discovered MakerDAO, which had just been created. A few weeks later, I met Mariano Conti (co-founder of MakerDAO, editor's note) who was surprised that I knew about his embryonic project! That's how I joined the organisation.

And you haven't left since. But why MakerDAO? Why stablecoins?

For me, there are only three cryptos that really count and that will exceed $1 trillion in capitalisation: Bitcoin because it's the first crypto and digital gold, Ethereum because it's the new financial infrastructure, and stablecoins. I could have worked on other projects, but I decided to focus on stablecoins because they have enormous potential. They're too often reduced to 'stable' cryptocurrencies, but they're much more than that. You can do lots of things with them, they're all very different, even if today many of them are badly designed and explode in flight...

You're thinking of the UST from the Terra project?

Yes of course. In the immediate aftermath of the UST crash, we saw the world's authorities rise to the occasion. Even the US Treasury Secretary, Janet Yellen, said that we had to react. But we've been saying for months that there's a problem with UST and Terra. So go ahead, do it, regulate. But don't tar the whole sector with the same brush.

Do you doubt this regulation?

Things are quite simple: there are centralised stablecoins based and localised, particularly in the United States. These are stablecoins like Circle's USDC and Tether's USDT (Read our big feature on stablecoins). These are sensitive to regulation. And then there are decentralised, non-localised stablecoins like MakerDAO's DAI. We don't meet the same standards.

What about Europe?

There are euro stablecoins, but look at the market... All the big centralised projects are already indexed to the dollar, except precisely those like DAI which are totally decentralised products.

Are you working on a DAI in euros?

This is one of the topics on the table. Some people at MakerDAO are pushing for it. We'll see.

What makes DAI special?

I often see people on social networks comparing DAI to USDC or USDT, which makes no sense. Circle and Tether are not technology companies, they are financial companies. They are like banks on Wall Street. They issue an ERC20 token and they have a reserve in front of it, that's all. Anyone on Wall Street could do what they do. That's why they're backed by the banks, whereas if you look at MakerDAO, it's totally different. We're a decentralised organisation that allows anyone to create a stablecoin by contributing their crypto-assets.

In March 2020, the market crash almost took you away. Since then, a large part of DAI's reserve is still based on USDC, which is a centralised stablecoin. Isn't that paradoxical?

There are also a lot of ethers. It's not a problem that there's UDSC. What we need is for there to be more than just that, for the reserve to be very diversified and easily scalable.

What would happen if USDC were banned?

We'll find an alternative. We're capable of adapting to any situation, as we've already shown.

How is MakerDAO managed?

We're a DAO so we don't have a manager like in conventional companies. We run the project collectively with just over 200 people across the planet. Everyone is paid from MakerDAO revenues. We earn money. Over the last six months, we've generated $100 million in revenue, which isn't bad. All our decisions are taken by vote.

And there's a constant consensus in the community?

No, not everyone agrees and that's normal. In fact, there are more and more differences within the project with "chapels", which doesn't stop us from moving forward.

What is your mission within DAO?

I'm responsible for MakerDAO's partnerships and marketing, and there's a lot of work to do because we don't communicate enough about what we do. Obviously the ecosystem knows us, but our aim is to be used far beyond the circle of those who know us. If we stop there, we won't reach critical mass.

What is the most important thing for MakerDAO?

Our compass is security. When I say security, I mean security in the broadest sense, and in particular financial security. This is essential, as the Terra crash clearly showed. For months, Do Kwon and others said they were going to kill the DAI. Today we see what that has achieved...

Do you think the UST crash dooms algorithmic stablecoins?

We need to stop talking about algorithmic stablecoins. They don't work. Some project holders think they're the only ones to have thought of it, but there's a reason why there's an over-collateral in the DAI system (to create $100 worth of DAI, you have to put $150 worth of cryptocurrencies). Do Kwon and others think they can do without it, but it's like in physics-chemistry, you test formulas, and in this case the algorithmic stablecoin formula is not stable, so you just have to stop because otherwise there will be other disasters. Algorithmic stablecoins are a time bomb.

You've been in the news a lot since the UST crash. Have you benefited from it?

If there's more talk about us? Of course they are. And at the same time it's normal, some projects like Terra haven't stopped saying that they were going to "kill" us, so inevitably... After all, nobody can be happy about the situation. Hundreds of thousands of people have lost a lot of money. Now we have to move on. The most important thing now is to continue to develop MakerDAO and explain to people why they should use DAI and all our other services.

What is MakerDAO's ultimate goal?

We simply want to become the world's leading supplier of credits. It may sound crazy, but decentralised finance is going to grow enormously. More than 2 billion people don't have access to a bank account and financial services. They cannot borrow money. This is the case in Asia, Africa and South America. DeFi and stablecoins have developed in Argentina for these reasons. As long as you have a smartphone, you can buy cryptos, put them in DeFi and borrow them in DAI. You can then spend them on a coffee or a house. It's as simple as that.

Do you think this will happen in the US and Europe?

In the US and Europe you have banks, people have access to credit, so at the moment it's not too much of a priority. But decentralised finance is still in its infancy. It has the advantage of being much cheaper than its traditional equivalent, so I think it will develop for that reason in advanced economies.

Of all the services MakerDAO is developing, which is the one you're most advanced on?

Clarily it's loans. You can deposit your cryptos and recover IADs. Then we're working on collateralisation with physical assets, meaning that you can obtain DAI by depositing tokenised real assets, such as real estate. The other product we're working on, which is really nice, is a smart contract system that can be implemented in other DeFi protocols such as Aave or Compound and which enables fixed rates to be maintained. This is very useful when there is a lack of liquidity in a pool and when there are major variations in rates. How does it work? The contract is linked to the pool and when there is a lack of liquidity, you can create DAIs to avoid sudden variations. When liquidity is low, rates rise. And the opposite happens when liquidity is too high. In my view, this is quite revolutionary!

For the past six months, Société Générale, via its Forge subsidiary, has been testing DAI loans. What are the results of these tests?

The tests are still ongoing, but it's working well. The fact that a European bank like Société Générale is adopting DeFi is a strong signal. There will be more and more of these experiments. Other banks will soon follow suit. In the future, no financial institution will be able to miss out on its financing channels.

How do you explain the fact that Argentina is "so far ahead" on the subject of cryptos?

For decades we've been living with one of the worst currencies in the world and a financial system that's completely off the rails. At the same time, Argentines are very well educated, so that creates a very favourable context for the development of cryptos. Argentines live with several currencies, official and unofficial rates. It's such a complicated environment that we have to adapt. For decades, Argentines have been preparing for the arrival of crypto-currencies without realising it.

How do you see the future of currencies? What role will stablecoins play?

It's very complicated to say. Things are changing fast and we don't really know in which direction. But I think that several currencies will co-exist and that we'll be able to use them at the same time just about everywhere. That's what's already happening in Argentina. And it's going to happen in every country. There will be digital currencies from central banks, stablecoins and cryptocurrencies. We'll use them according to our needs.

But neither the Fed nor the ECB will let that happen. You know that in the US and Europe, there is only one currency available...

Yes, but they will have no choice. It's going to force itself upon them.

THE BIG FOCUS

Ledger and Cathay launch €100m fund: "It's the best time to invest"

Crypto security star and venture capital specialist Tech present a €100 million investment fund dedicated to Web3 start-ups. Bpifrance is one of the investors.

As everyone in the crypto ecosystem knows: bear market periods are the best times to invest. And Ledger is one of the players who knows this perhaps better than anyone. While many are pulling out of the market in anticipation of bitcoin and other cryptos regaining their peaks, the French (and global) digital asset custody giant yesterday announced the launch of a €100 million fund dedicated to Web3. The aim? To take advantage of the current climate to unearth nuggets. "We've just come out of a pretty crazy bull market, and now is the time to create the future champions. It's the best time to invest", explains its boss Pascal Gauthier.

The manufacturer of the Nano, a digital wallet that has already sold 5 million units, is not alone in the venture. The fund was co-created with one of its shareholders, France's Cathay Innovation. Already very active in tech-related areas, Cathay Innovation, which manages €4 billion in assets, wants to accelerate its involvement in Web3 and will be in charge of "deploying" the funds, i.e. investing in them. "Ledger brings its technical expertise and we bring our financial expertise," adds Denis Barrier, co-founder of Cathay Innovation.

This 100% Web3 fund is the first of its kind in France. Bpifrance, which has invested in around ten crypto projects, has taken a ticket. Other major companies are also taking part (we'll soon know which ones), as well as a number of individual investors. Ledger and Cathay have already started investing part of the €100 million. "We should be announcing a number of deals in the coming weeks", explains Denis Barrier.

In total, the fund is targeting around twenty deals, with tickets ranging from €200,000 to €5 million. It's important to note that while the fund is French (cock-a-doodle-doo 🐓 ), its playing field is global. "We're in a global industry. It makes no sense to limit ourselves to France or Europe", insists Pascal Gauthier. The fund's first investments will give an idea of exactly where they want to put the cursor.

This edition was prepared with ❤️ by Raphaël Bloch and Grégory Raymond. The Big Whale is a free and independent media. By supporting us, you are helping us to develop. PS: it's very kind of you to pass this edition on to your friends, but take the opportunity to tell them to subscribe.

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