Part 1 of 3 — An Interview with Dan de Sa of CoinMirror
Earlier this year, I decided to go all-in and took the leap of dedicating my work to the blockchain space. With a lot of speculation and challenges both from private institutions and regulatory bodies, I must say it has’t been a smooth road. Much like how the internet spread slowly in the ’90s and and then began to proliferate in the 2000s, there hasn’t been a straight freeway to success. The internet faced a lot of scrutiny, especially as it became an open platform for illegal activities. However today, mostly everyone can see that the internet plays a crucial role in core business operations for most institutions and serves as an integral part of our daily lives. I believe the same holds true for blockchain.
A couple of months ago, I was fortunate enough to join the decentralized team at CoinMirror, leading brand management efforts for the platform. Our team of 7 employees across 5 countries, took a path that many wouldn’t dare to consider, and is the antithesis of the way the crypto industry seems to be operating. We bootstrapped our way to launch a minimum viable product and iterated from there. This proved to be a prescient decision as we were able to mitigate liabilities and at the same time, validate learnings and assumptions for future product iterations.
What better way to know a brand than by asking the people who built it in the first place? In a three-part series, I’m interviewing Dan de Sa, one of the co-founders and the Head of Business Development for CoinMirror. For the first part, we are gonna focus on the current state of CoinMirror and how the platform is fulfilling the promise of democratized investing through the summer and winter of the Cryptoverse.
What is the current state of CoinMirror?
Dan: CoinMirror’s original vision was to guide retail investors to sound ICO investment opportunities. In the wake of the 2017 boom, token offerings proliferated and there was no way any mass-market investor could reasonably cut through the noise. The goal was to create an expert-guided crowdfunding platform, where everyone would benefit from the collective bargaining power of a larger syndicated capital pool, and the domain expertise of solid investors in the space. This original vision remains the same, however over the last 6 months we realized that we may have actually tapped into a grander vision of the future of investing. Currently, CoinMirror is plowing ahead with a multi-pronged growth strategy focused on enabling SmartFund Leads (expert Portfolio Managers) to utilize our already built-out decentralized infrastructure to invest across the diverse array of tokenized assets and exotic financial products that are on, or will be coming to market. In this way, we hope to create accessible, low-threshold, expertly managed investment opportunities for the mass-market investor with limited resources, not just high net-worth individuals or LPs. In the last 6 months, we have launched our public beta, had thousands of dollars deployed into our platform, were featured (unsolicited) on the front page coverage of Nasdaq.com, and built long-term strategic partnerships with top tier ancillary business in our space.
With the bearish outlook on cryptocurrencies and tokenized assets over the past couple of months, how is CoinMirror adapting to the market?
Dan: The recent downturn or “crypto winter” that we have experienced is part and parcel of the cyclical nature of new technology adoption. In the crypto world we can see this by evaluating Bitcoin’s price over the years with numerous 80–90% drawdowns following major bull runs. There have been 8 bear/bull cycles in BTC’s history with an average ~65% drop. This current one has been approximately ~80%. This is primarily making waves because prices finally reached levels that news organizations cared about. This is a direct reflection of growing awareness and overall, that is a great thing.
However for CoinMirror, the major implication of this downturn has been a drastic slowdown in quality token offerings to invest in. This has caused stagnation in the pipelines of our private SmartFund Leads, and further closing of ranks around the people who have the knowledge, capital, and access to high quality investment opportunities. This is almost an exact parallel for the practices that exist in the fiat world, especially exacerbated by economic downturns. In the coming weeks we’ll share more about how we aim to combat this. Furthermore, we have seen significant regulatory progress in two critical areas of our business — token offering classifications and Smart Contract-based financial services. We welcome both of these moves as they are absolutely critical to building a trust bridge to the broader fiat world. However, consumer protection must be balanced with financial inclusion and fulfillment of the promise of decentralization and global financial inclusion. CoinMirror has adapted by focusing on non-security token offerings, exploring partnerships with teams building a variety of tokenized financial products which we can offer to our Leads, and exploring ways to fast-track our mission of creating a legal, regulated investment platform open to the public. Over the next few weeks, I’ll be sharing more details on these efforts.
What are the major roadblocks faced by the CoinMirror project?
Dan: The major roadblocks facing CoinMirror are nearly ubiquitous for all players seriously involved in the crypto world. Regulations, scalability, interoperability, and quality investment opportunities. To detail these further:
Regulations — We must be cautious of operating a platform that enables investment into securities. Furthermore, as a Smart Contract-based platform, we must be cognizant of decisions such as the EtherDelta case and the long-term ramifications for us. This is why we are in the preliminary stages of working with partners who hold the necessary licenses in their respective jurisdictions.
Scalability — Low latency, high throughput. This is the mantra that all in the crypto space are probably muttering to themselves and dreaming about at night. In order for widespread adoption to occur, the UX must be at minimum, the same as what exists in the centralized world. This means investors depositing funds, or really anyone interacting with a blockchain protocol, must not experience ‘processing’ times of even minutes for many use cases. If I Venmo or PayPal a friend, those funds are instantly available in their accounts, even if we disagree with the method of delivery and the web of middlemen, it is a fantastic user experience. Scalability affects us all, and we are actively monitoring initiatives and other blockchains that are attempting to solve this issue.
Interoperability — There are many blockchain protocols in existence. The debate rages on between Bitcoin maximalists, Ethereum evangelists, and all the other fantastic protocols in development. In order to achieve our vision of enabling a Lead to diversify and invest across a variety of asset classes, we must be aware that perhaps a commodity such as oil, might be on a different or even private blockchain, as opposed to a real estate investment opportunity, or a ‘traditional’ token issuance via ERC-20 tokens. We must also factor in the new token standards being created for security token offerings.
Quality investment opportunities — CoinMirror’s mantra has always been to ‘fulfill the promise of democratized investing.’ Individual access to token offerings is a wonderful idea in theory; however the barriers to entry to quality investment opportunities are already significant, and include things such high minimum investment thresholds, ability to perform proper due diligence and often protocol and code review. Additionally, much like the best traditional seed-stage venture capital investors, deals are frequently closing in private rounds, with the biggest gains being realized again by HNWI and massive LPs. One can point to the Telegram ICO as the prime example of breaking the promise of democratization, access and returning power to the little guys. It is no secret that top VCs share deal flow and network amongst each other sharing strategy, opportunities that may fall out of their purview, and critical personal introductions to the best entrepreneurs with the best startups. The tokenized world offers us a chance to alter this balance in favor of the majority. This means that CoinMirror must enable our Leads to compete for allocations with more than just capital. We are working hard on multiple angles to deliver true ‘value-add’ capital to projects, in ways that traditional investors cannot and we feel, only CoinMirror can. Although I don’t want to reveal too much internal strategy, there will be a lot of exciting developments as we move closer to our goal with announcements to come.
We will have lot more on our strategy to overcome these obstacles and fulfill our mission in the coming weeks!
