Akropolis Q1 Update

Mar 15, 2019 · 9 min read

From An Institutional Approach to Finding Insights in Informal Networks

1-Minute Summary

Our Vision

Our Place in The DeFi Ecosystem

DeFi is by far the most promising area of blockchain application, with a number of high-quality interoperable projects promising the future of transparent, fully auditable, efficient peer-to-peer interactions, based both on existing financial primitives and creating novel ways to generate and exchange value.

Yet due to the nascent nature of the ecosystem, DeFi is still very much looking for its product-market fit beyond the immediate community of developers and sophisticated speculators. In our research, we turned to the good old “painkiller vs vitamin” metaphore and over a number of months researched and identified a product-market fit, that, in Kayvon’s words “speak to a mass audience” and address a basic need in financial terms and a real pain point: (in)ability to save and grow one’s savings safely and effectively.

It all starts at the bottom of the Maslow’s pyramid

Mass adoption of the technology will not happen until it is unnoticeable, abstracted away as a part of the solution addressing people’s essential needs. Majority of the population do not care about or have the knowledge to trade, take a synthetic position on an Apple stock or engage in the mental acrobatics of margin trading. Let’s get to the basis of the Maslow’s pyramid and adapt it for the DeFi ecosystem. What “billions of users” care about is to be able to:

Without imposing new behavioural patterns on users who have already been operating like this for years, we carefully recreate these centuries-old constructs as digitally-enabled DAOs, make them scaleable, fraud-proof, and geography-agnostic using the blockchain technology.

Finding a Product-Market Fit [PMF]

The search for the elusive product-market fit starts with an understanding what it stands for and when it doesn’t exist, despite our best intentions (“confirmation bias is strong with this one”). Marc Andreesen of a16z loosely defines product-market fit as:

You can always feel when product/market fit is not happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close (Marc Andreesen, [2])

So we did a bit of reading, and a lot of face-to-face customer research to understand the secret of longevity behind informal savings groups.

Our internal research database

For centuries, well before the industrial and early financial revolution, and before any concept of government provision for its subjects, trust-based communities were the only source of security, whereby economic transactions were rooted in trust and social reputation. In the West, they evolved into co-ops and then mutuals and banks. In many an emerging market they still form an essential backbone of what is known as “informal economy”. Its main unit is a savings group, which is a member-owned institution, typically <20 members who save together and take small loans from the common savings pool. The names for the savings group phenomenon vary by country: it’s chamas in Kenya, ekub in Ethiopia, susu in West Africa and the Carribean, stokvel in South Africa, paluwagan in Philippines, pandeiros in Brazil.

Geographic and cultural differences notwithstanding, these socio-economic archetypes have proven to be remarkably robust. They all have a common goal: to create an alternative financial structure where they can save, invest and lend together, as well as borrow money they need without long procedures, official documents for loan applications, and oftentimes without using a bank. This day, they remain a competitively-priced source of credit. As member-owned organisations, there is no external cost of capital return to factor into the economics — all the capital is internal and can be sourced through the network.

Our analysis turned to one of the most interesting fintech markets in Africa: Kenya. What we saw was that clearly articulated goals and mutual member support are major contributing factor to co-op growth from 10 members to 25,000+ members and multi-million-dollar treasuries accumulated by its member base. Indeed, most successful chamas have grown from 10-person village groups into banks or mutuals that uncannily remind DAOs.

When you superimpose that on a 91% mobile penetration rate, high mobile money adoption rate, young population with the average age of 20, and existing centuries-old behavioural patterns that belie savings circles with relatively weak legacy financial infrastructure, you get a fascinating market that in respect of familiarity with digital financial infrastructure is more advanced than what we have in the US and Europe.

Other surprising factoid include 300,000+ registered chamas in the country controlling more than US$3.5 billion worth of assets [3] and ca.1,000,000 unregistered chamas. According to the World Bank, remittances to Sub-Saharan Africa reached US$38 billion in 2017 [4], of which a large part is formed by diaspora remittances. Continent-wide AuM estimates for informal savings circles vary from $90 to $100 billion worth of assets.

Our market analysis, fintech/web3.0 opportunities review and PMF process and how we are thinking about building a consumer-facing product on top of a protocol will be covered in our later updates.

Progress to Date

Our friends at Zerion took the first place. We are not even bitter. Honest!
Cheers, Andy:)

How Does it All Fit Together? A Retrospective

When we first embarked on the Akropolis project, our mission was to research and prototype a viable alternative to the broken pensions system that addresses our admittedly rather dark 10-year vision. The path to identifying it, learning from our mistakes and assimilating new findings into a product has not been a straightforward one. To put things in perspective, leading researchers have been publicly battling this very topic for over 35 years! However, it wasn’t until now that a confluence of the technology enabled p2p networks, openness to alternatives and emergence of viable challenger models, that a scalable solution was possible.

We believe that by now we have the right building blocks in place.

What’s Next?

Tech and Product


Product, Distribution and Technology Partnerships


We would like to leave you with this quote by a much respected Andy Rachleff, a co-founder of the $10bn AuM Wealthfront and Benchmark Capital. His 500Startups customer development deck is a classic. Rachleff’s analysis of the product-market fit decisions made by the prodigious Sequoia founder Don Valentine led him to the following observation:

“If you look at the most successful startups, they actually didn’t have the world’s best management teams in the very early days. They happened to have conceived, or more likely pivoted into, an idea that addresses an amazing point of pain around which consumers where desperate for a solution”.

Yours truly,

The Akro Team.


[1] Citi GPS Report (2016) ‘The coming pension crisis: recommendations for Keeping the Global Pensions System Afloat’, Actualité financière et économique — Information finance avec l’AGEFI, No data [Online]. Available at: http://www.agefi.fr/sites/agefi.fr/files/fichiers/2016/03/citi_retraite_hors_bilan_21_mars_1.pdf [Accessed: 14-Mar-2019].

[2] a16z Crypto Blog (2017) ’12 Things about Product-Market Fit’, a16z Crypto Blog, 18 February [Online]. Available: https://a16z.com/2017/02/18/12-things-about-product-market-fit [Accessed: 14-Mar-2019]

[3] Kenya Association of Investment Groups (2016) ‘The Chama Handbook: third edition’, Kenya Association of Investment Groups, No data [Online]. Available: http://kaig.org/kaig/_dwnld_fls/0kaig e-version.pdf [Accessed: 14-Mar-2019].

[4] Kenya Association of Investment Groups (2016) ‘The Chama Handbook: third edition’, Kenya Association of Investment Groups, No data [Online]. Available: http://kaig.org/kaig/_dwnld_fls/0kaig e-version.pdf [Accessed: 14-Mar-2019].


The Financial Protocol for the Informal Economy