Recap: Twitter Space with AllianceBlock’s Co-Founder Matthijs De Vries, Avalanche Labs Matthew Schmenk and GBG’s Darnell Walker
Our CTO and Co-Founder Matthijs De Vries moderated our first Twitter Space with Avalanche Labs Matthew Schmenk and GBG’s Darnell Walker. In the Twitter space, the recent FTX issues were discussed as potential solutions to mitigate these issues from happening again and how self-regulation could play a role in enhancing the industry.
It has been another busy month for AllianceBlock and the wider industry. The problems with some centralized players acting unpredictably persist, but as these issues keep occurring we are continuing to build solutions and create partnerships that are helping DeFi to become more compliant while remaining true to decentralization ethos.
We are founding partners of the new crypto and digital asset program created by Plug and Play, where we will be exposed to an influential network of startups that is helping to rethink innovation in financial services. We have officially commenced our first project funding round on Fundrs with dua, you can participate until 14th December 2022, find out how to do so here. Our Trustless Identity Verification (TIDV) solution is live, which is a huge step forward in our aim to provide tools that achieve the optimal balance between compliance requirements and data privacy, a deep dive into TIDV can be found here.
With the release of TIDV and the events of the collapse of FTX, on Thursday (17th November), our CTO and Co-Founder Matthijs de Vries moderated our first Twitter Space with Matthew Schenk, Business Development Associate with Avalanche Labs, and Darnell Walker Sales Director at GBG. The discussion featured Fundrs, TIDV, the need for decentralized identity solutions, and how we can use these tools to self-regulate the industry and answer some questions from our community. Below you can find a summary of the key points and snippets.
Centralization continues to have issues — let’s self regulate
Matthijs commented on the issues with FTX and introduced how we, as an industry, can self-regulate to prevent overt reactions from regulatory and governmental bodies.
Matthew Schmenk, Business Development Avalanche Labs: Yeah. So both of you two have a pretty strong background in terms of regulatory compliance. I was wondering if you guys could provide your thoughts on the FTX’s situation and what happened and really go into detail about your thoughts behind it.
Matthijs de Vries, CTO and Co-Founder of AllianceBlock: Yeah. So first of all, I think FTX shows that decentralization did not fail. It was centralization that failed yet again. As you know, the irony, I think a lot of people already pointed this out on Twitter, is the fact that when Bitcoin was created, it was created because of the 2008 economic downturn. And in order to give more power to the people to avoid this dependence on centralized entities. Right. And then when we are years into a maturing industry, we see that we want to put ourselves depending on these centralized entities again. So the irony is, it’s really that and I think it’s easy to say that I had a Twitter thread on this as well. It’s easy to scream like we need more or stricter regulations. But I think that we don’t really know what we’re asking for if we do that because if we want governments to intervene in order to avoid things like this in the future, they will not do exactly what we will ask for. We’ve seen from past examples that governments usually do not fully understand, or fully grasp what crypto stands for, what we do, and what we want to do. So if we want to avoid this kind of black swan event, it’s not really black swan events anymore. If there are three in a row, right? But, if we want to avoid things like this happening in the future, we should have a proactive stance and I think we should really think about what we can do self-regulating if we can show that we govern ourselves and each other. We could avoid government interference and we can write our own story on how this is what this industry should look like. I don’t know. What do you think?
What does it mean to self-regulate?
Matthijs and Darnell commented on the psychology of self-regulation and how we can view the events with Binance and FTX as examples of blockchain leaders showing us ways to improve self-regulation. Matthijs highlights the key points of self-regulation in a recent Twitter post, which you can find here.
Matthew: Would you mind touching upon what you mean by self-regulation? You mean like guidelines that aren’t really enforced?
Matthijs: Yeah, so that’s nothing that’s law enforced. Like, I think what CZ. did with proof of reserves is an excellent example of what we can accomplish with self-regulation. And also as a community, we can decide, you know, what kind of projects we want to ignore and what kind of projects we want to interact with by having a set of standards that we decide upon ourselves. You know, all these things are kind of a form of self regulation. So. So what are your thoughts on this?
Darnell Walker, Sales Director GBG: Yeah, Totally agree. And I guess what companies should do is they have been openly self-regulating themselves in order to draw adoption. Some privately owned companies will follow, yet others, in my opinion, won’t, especially if they’re not required to. And then, I guess thinking of selves, one of my favorite books that I’ve read through the pandemic of 2020 was by Morgan Housel called The Psychology of Money Timeless Lessons to Wealth, Greed and Happiness. And a lot of the things to do with self-regulation is also to do with the psychology of self. So can you regulate your feelings and emotions to not look at price and simply dollar cost average in every day, week or month? Again, are individuals taking control of their private keys and that is the best way to self-regulate. And again, there are individuals performing due diligence on whom they’re placing their funds with. These are all key questions, which time and time again people should be asking. And the reason why they should be asking these questions is, unfortunately, it goes back to trust and not necessarily trusting a centralized third party because as you said, whilst you may think that there’s good character and nature in each individual, you know, we thought that SBF was giving to charity wholeheartedly. And lo and behold, we’ve come to find out that that’s not been the case as well, whilst was given to one who was taken with the other.
Lower barriers to entry will amplify compliance
Matthijs highlights how TIDV and the collaboration with GBG are helping lower the barriers to project entry so they can choose solutions that enable more efficient compliance. This will pique the interest of traditional financial players and help drive regulated adoption.
Matthijs: So for those that are not fully aware, GBG and AllianceBlock are working together and we have collaborated on TIDV. So TIDV is a product of the collaboration of GBG and AllianceBlock, where we want to make it low barrier for projects to operate compliantly because being compliant is easy to say in a sentence, but to actually, you know, execute upon this and integrate this in your processes or applications can be very, very cumbersome, could be very expensive, and therefore it can be very daunting. And as a project you can say, “well, I operate a utility token, so maybe I don’t have to do the KYC verifications, I can skip it.” And we saw a lot of projects do this, and we know that in the long term, you know, regulators will catch up on them. And so it’s a very dangerous slippery slope. So how can you make this lower barrier for projects to be compliant is to offer something that can be integrated on chain where people will be able to reuse their KYC verification, reuse identity, verifications on chain without actually disclosing their information. This makes it cheaper for projects, to use it because they don’t have to integrate something from scratch. They don’t have to do all KYC verifications from scratch, which can be very expensive if you have very low volumes like hundreds of verification as opposed to hundreds of thousands of verifications. And if you make it so low barrier, more projects will be able to choose for compliance. And they can also have, you know, opt-in compliant features in their existing products thanks to the fee, which ensures that we can also expect more adoption coming from traditional finance.
What tools can be utilized to assist with self-regulation?
Matthew and Darnell commented on practical tools they and the industry could create, which could point us toward better methods for self-regulation.
Matthew: I kind of envision a world where maybe you have some sort of on-chain ID solution in which it’s privacy protected via a ZK circuit and it has your personal information, probably like an NFT or something. It’s tied to your account and it allows you to go from protocol to protocol. So you know like when you set up with a centralized exchange or with a bank, you have to put in like your Social Security. If you’re in the US date of birth, address, a bunch of personal information, or like if you’re getting a loan, your credit score gets drawn upon. So I envision a world where you are looking at on chain identity solutions that are also private, in which protocols can vet certain parts of your kind of personalized financial identity.
Darnell: From the GBG perspective, we are doing that global KYC onboarding of customers. So we’re trusting that the individuals that are coming in or the front end are exactly who they say they are, and we’re identifying them. We also have the ability to monitor the transactions of the wallet, but not necessarily tie the two together, which you don’t want necessarily. But whilst it was spawned in terms of Bitcoin to be censorship resistant, it needs a helping hand. And that helping hand is again, as we go back to regulation and requiring regulation to hopefully help the industry grow and mature in the right way so that new projects and new technologies continue to be spawned off the back of it.
Last month our Co-Founder and CEO, Rachid Ajaja, shared a very relevant and interesting solution, Nexera ID — Check it out below.
First integration of TIDV with Fundrs
Matthijs explains how our solutions are already enabling better self-regulation for the industry and how Fundrs is using this solution to promote better practices toward compliance.
Matthew: Yeah. So now that we’ve heard about TIDV, do you mind speaking more about like funders, like what it is, and really how it kind of interacts and is a part of your ecosystem?
Matthijs: Yeah. Yeah. Cool. Fund Thanks. Yeah. So Fundrs actually the first project that fully integrated TIDV and I think an interesting story for those who don’t know when we founded AllianceBlock back in 2018, it was with the initial idea or a basic idea of what funders is today. And our vision was always that we needed a platform that is community-driven, where the community, the people that fund projects through buying their tokens, have a voice in how this funding process goes. They vote on whether milestones have been hit and whether they deserve the next round of funding, and they can earn reputation by doing so. And integrating TIDV was a super logical next step because having a project list on Fundrs and for the project and to be immediately automatically able to raise funds compliantly. It’s a huge deal, especially if it can be done cheaply, but with all the best practice with regards to compliance in the industry. and in funders. Like I said, community, it’s super important. But Community Eats is a collection of people and every person has an equal opportunity to earn reputation and reputation in the industry. It’s very important to better the reputation you have, the more weight you can have in what you have to say and what you have to vote for. So this is going to play a more important role in the entire ecosystem.
Our first Twitter Space was a hugely relevant conversation between AllianceBlock, our identity verification partner GBG and one of the space's most influential Layer 1’s Avalanche Labs. In this Twitter Space, we were able to discuss the crippling events of the past year, why regulation in the space, and more specifically DeFi, is as important as ever and talked about our solutions and what this image of self-regulation could look like shortly.
Over the next months, we will continue to develop and implement solutions that provide practical tools to the industry that help us focus on self-regulation. Although the difficult events of the last year have been damaging for users and the trust of the industry, it has also presented an opportunity to show how AllianceBlock has been responding to these issues since we started building in the 2018 bear market. AllianceBlock is proud to lead the way in helping the industry become more self-regulated while ensuring that this is done in a compliant fashion. This conversation is an important way to show our community and prospective future users how we are building a fully end-to-end infrastructure for blockchain and the future of a compliant DeFi.
If you want to listen to the Twitter Space in full, check it out below
About AllianceBlock
AllianceBlock is building seamless gateways between TradFi and DeFi by remedying issues in both spheres and linking them more closely. AllianceBlock sees the future of finance as an integrated system in which the best of both worlds can work together to increase capital flows and technological innovation.
They are building this future by bridging traditional finance with compliant, data-driven access to new decentralized markets, DeFi projects and ecosystem-scaling tools such as funding and interoperability. As such, they are building a next-generation financial infrastructure that aims to provide regulated financial entities worldwide with the tools they need to access the DeFi space seamlessly.
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