Understanding the Decentralized Finance Movement and Ethereum Through Blockchain Data
Christian Crowley, CEO of Alethio answers questions about Defi, Ethereum data, product development and the need for more robust blockchain data
What is Alethio?
Alethio is an advanced blockchain data, analytics & visualization platform. Fueled by data science, semantic modeling, and machine learning, Alethio’s modular, customizable platform sits sit on top of a living index of synthesized blockchain data that’s updated in real-time. Our platform integrates a number of tools — including a block explorer, a monitoring tool & a reporting tool — that emphasize user experience, custom insights, and meaningful data visualizations. Alethio also offers direct access to its data engine via a series of APIs. Our platform is also fully deployable on private or permissioned Ethereum-based blockchain networks for enterprise clients.
Interview with Christian Crowley, CEO of Alethio.
We sat down with Christian Crowley, CEO of Alethio to ask him questions about Defi, Ethereum data, product development and the need for more robust blockchain data.
What’s your background and how has that shaped Alethio?
Initially, I went to graduate school for a joint law and business degree. After graduating I pursued management consulting for three years. While I was there I worked on a number of different initiatives focused on the intersection of strategy and technology. Next, I joined a data analytics startup in New York that focused on translating different sources of data from social, technology, filings, patent releases, and translating that into product intelligence.
And after joining Alethio, there was a need to apply some additional strategic focus to the great work they were doing. With my background in consulting and having experience at an analytics company, it really helped frame some of those approaches and that’s kind of how we’ve evolved to date into our newer operating model and product strategy at Alethio.
Why do you believe access to blockchain data is important?
At its core blockchain technologies like Ethereum and other smart contract-based platforms are public datasets. And part of the promise of why they’re so powerful is that they are truly public data sets that anyone can potentially access and anyone can see as the single source of truth.
But the reality is the format of these public datasets is very difficult to actually understand and discern meaning. So while the network is public and anyone can spin up their own node and access the data, it becomes really challenging to understand and act upon the data. That’s because the data is at the protocol level in a raw format. It’s fragmented and difficult to tie activities together especially across smart contracts that are architected very differently.
So, from our standpoint, democratizing access to this publicly available data set is paramount.
There are advanced users that are developers and other longer-term participants in this space that have an understanding or that have developed their own tooling and their own custom ways to access this information. However, we want to broaden the ability to meaningfully access this data & avoid the potential for information asymmetry that could provide advantages to certain users. If we’re to accelerate the onboarding for a number of newer users or broader base of users, we have to open up this type of access to everyone.
Alethio has built so many products, Ethstats, DexWatch, Alethio API, the Alethio Defi Dashboard on Tableau, and Alethio reporting and monitoring. What’s your team’s secret to shipping great products so quickly?
So it’s pretty simple. We operate highly efficiently as a unit and that’s 100% due to our incredibly talented team. Our developers, data scientists, and design teams are incredibly motivated and they’ve been involved in this space from very early on and have experienced the problems we’re trying to solve.
Our team has about 17 people full-time right now, and they are all self-motivated, autonomous and intuitive in how they approach product development and how they work towards a common goal.
We have also been able to adapt. We made a pivot late last fall to create the API product, and to develop monitoring and reporting in addition to the explorer, all of which were based on the same data pipeline. Our ability to shift and direct this amazing resource towards a newer goal, based on market need, and what we view as necessary tools continue to be a differentiator for us.
What tips do you have for managing a remote team in a remote-first organization effectively?
It’s important to have that empowerment at the product level. I’ve tried to offload or deputize as much decision-making as possible to these team members because they are very close to the product and they’re often interfacing with users more frequently.
Did you recently empower the product teams or do this from the start?
Early on we made the decision to really empower our individual product leads to build and work together to create a unified and cohesive roadmap, but also drive the development of their individual component products autonomously. So our teams are distributed and there isn’t one central location where we’re driving all this effort from. It trickles down at the product level. In many cases, these product leads sit with or sit in close proximity to their component team members, some of whom are shared across products (e.g., in the case of front end work). But we really created this interconnected web that is quite flat and is quite autonomous in how we make decisions.
What’s the greatest challenge to creating an effective remote team?
I think the challenge of a distributed team is not having team members able to sit in the same location and work together during the same time zones. So, we created layers of accountability and autonomy. Alethio wouldn’t be able to move as fast if we tried to create a traditional hierarchy where everything flowed through one person.
What excites you about the decentralized finance movement?
Decentralized or open finance is very encouraging. To an extent, defi addresses what could be a very strong use case among a number of individuals.
At its core, defi really democratizes access to financial products and potentially services in a way that’s faster, cheaper, quicker, and relies far less on a trusted intermediary. Decentralized finance illustrates so many ways why Web3 is so exciting. Out of defi, we’re seeing actual usage and we’re seeing individuals build teams, products, user interfaces (UIs), and new capabilities on top of existing protocols. There’s no longer a need to rebuild everything. You can use other tools to accelerate development and realize a far better output or product more rapidly and I think that’s truly exciting.
What’s the best outcome for defi/open finance?
The true potential of open finance is absolute visibility, absolute transparency across protocols to understand what, how, and why things are the way they are, whether it’s interest rates or different decentralized finance products. Having a picture that shows a connected user base across every platform is truly powerful. And, that picture is something that’s impossible with the current state the finance because of all these individual banks and financial services institutions prioritize creating walled gardens and extracting taxes that way.
Where are we right now with the state of defi?
Right now, we’re really in the testing phase. The ecosystem is showcasing what’s possible with defi. From Alethio’s standpoint, we’ve loved tracking each of these protocols as they popped up and as they increasingly grow and share a common user base.
We’re already seeing layers within defi. There’s Ethereum and then Maker and Compound, as well as other applications. I think this space is incredibly collaborative and competitive at the same time because all of these protocols realize that while they are on paper perhaps competing with other applications or protocols, they have the same users. There is a symbiotic relationship between a shared user base among protocols where the benefits are potentially exponential.
I think we’re finally seeing scenarios where tooling and interfaces are being collectively built, leveraging, whether it’s data products or partial protocols or other elements that other teams have built and people are embracing them.
What do you still want to see out of defi?
I’d love to see an evolution where we’re actually addressing true use cases. For example, student loans, short term loans, the issues with subprime auto loans. There are actual structural risks being posed to our current economy that I think could be addressed by open finance and in the very near term. So, I’d like to see defi expand more rapidly to actually help individuals in need. I’m optimistic and I think UI is increasingly playing a big role in that sense.
What’s currently the bigger challenge for user adoption, user interface (UI) or practical use cases?
I think it’s both. UI is still a barrier. I think the use cases if developed further will be able to provide a 10x better solution than the current state of finance, but we have to show why it’s better and that’s largely through UI.
That being said, these teams have made phenomenal strides from where things were even three months ago, but we’re still largely targeting an insular community. We’re largely targeting crypto users and although it’s a growing user base, more proactive outreach to unbanked, to the individuals who need access to loan products, and to individuals who need access to capital is warranted.
I come back to the crises our society is facing around student loans, auto loans, credit card loans, and all of these are ripe for very targeted disruption. The protocols are in place, it’s just a question of evolving them further. There are so many fantastic teams working on this so I think it’s just a matter of time.
Alethio has created some amazing snapshots of the Ethereum ecosystem. Can you walk me through a few images and explain what they mean for defi and the overall Ethereum ecosystem?
Certainly. In the first image, you’re looking at the state of defy across the top protocols in November of this past year. You have largely isolated ecosystems at the top. We’re seeing connection points largely between Maker and Compound with Uniswap providing nice liquidity across some of these protocols.
But flash forward nine months and all of a sudden you see, a large number of additional protocols spun up and greater connectivity between these platforms. We’re looking at a span of nine months seeing immense growth both horizontally within a given platform and also across platforms. The depth of the number of shared users and the number of connection points between users is growing immensely. More importantly, though is that this is just one view of defi.
What’s another piece of the defi ecosystem that you’re watching closely?
We’re also looking at decentralized exchanges and their role in the coming defi explosion. The line between what constitutes a decentralized exchange and what constitutes a decentralized finance platform is blurring. IDEX, Bancor, and these teams traditionally thought of as DEXs are offering in some capacity, defi services. And I think that’s really just an evolution of what it means to be a DEX.
One thing that strikes me about this image is that it’s decreasingly reliant on centralized or central nodes. The nodes are increasingly spread out and peer-to-peer. These protocols really just existing to facilitate interactions between lenders and borrowers; liquidity providers and those who want to access capital. This allows for the potential of Web3 to become more effectively realized with direct interactions between individuals facilitated by DEX’s or protocols that don’t require any central body or entity to hold large amounts of tokens or large amounts of liquidity.
Eventually, the visuals will get overwhelming and I encourage that and Alethio is going to make them more accessible, but eventually, this should be just an indiscernible web of interaction between those who are participating in the open finance ecosystem.
More importantly, I think open finance is just an entry point. I don’t want us to think of it as, you know, just financial services on the blockchain. It’s an entry point to democratizing access to a whole swath of different types of assets, securities, physical assets. It’s an on-ramp. Users are able to capitalize on the potential of decentralized exchanges and these defi protocols.
Are there any certain metrics or stats that you find most meaningful when quantifying Defi and Ethereum adoption?
Yeah, I’ll start with defi. Ether locked in defi is interesting, but it’s only one metric. We’ve been looking at the total number of accounts associated across all the defi protocols and examining seeing that growth. We’ve also looked at the number of unique accounts. There’s a way to see shared accounts of one individual operating across multiple protocols, but how do we actually quantify the number of unique defi users? We’re looking at metrics like growth in overall transaction volume across defi protocols over time, so essentially, the net number of total transactions that are being facilitated by these platforms. Alethio has created a whole dashboard sandbox geared towards kind of gauging the growth of the space.
On Metrics for Ethereum Adoption
Relating to Ethereum, we look at common metrics like mean transaction volume, account volume, and account growth volume. We also value interactions with smart contracts, unique interactions with smart contracts, and growth over time across different segments at groups. For example, we take defi or collectibles and creating ways to establish user bases across these different segments which start to paint a picture of how connected these things are.
What makes analyzing blockchain data difficult?
It’s an evolving picture because the reality is teams are building platforms that leverage smart contracts that are architected quite differently. So it does require some work to parse those contracts and then understand how there is a level of connection across them.
So we’re starting with defi and we’re partnering with teams to kind of get an accurate sense of their user bases. And then it’s a matter of examining how we can abstract that up to an industry or a segment and then all of a sudden you no longer have just Ethereum, but layers of users that paint a connected and transparent picture about what’s happening on the network.
Our challenge is determining how we grow our capabilities with this ecosystem evolves in size, complexity, and sophistication. Our task is to ensure that we are evolving our tooling commensurately.
How can someone currently use Alethio to get updates or analytical insights about defi?
All our tools like our API can be accessed via our Alethio platform.
What areas other than defi within crypto do you see demand for blockchain data growing in the next 6–12 months?
DAOs
I think decentralized autonomous organizations are very interesting. We’re watching this development very closely. I believe there are ways we can provide corresponding tailored interfaces for users of a given DAO that provide usage and analytics that allow them to make more informed decisions when interacting with a DAO or set of DAOs.
Gaming
Gaming is another potential segment. What we can provide will really just depend on how these platforms evolve and how much of gaming is actually on Etherum or on some form of a sidechain or another blockchain-based solution. I think what we’re seeing is the growth of scenarios where part of this is being built on other smart contract based networks or layer two solutions like Loom. We’re watching teams that are looking to help with some of the scaling issues to see what data and analysis Alethio can provide.
Tokenized Assets
Tokenized assets and securities are another potential areas that we’re noticing an increasing demand for data. There is still a lot of questions, but this goes back to the point of open finance really being an on-ramp to these applications. We’re interested in tokenized non-fungibles, collectibles, or other assets that are exchanged either directly via DEXs or through decentralized finance platforms and then helping the owners of these assets so that they can monetize or grow the value of their assets.
At the core though from our standpoint is ensuring transparency about what makes these assets or these component products.
How could providing asset transparency be applicable to mainstream adoption whether at the consumer or institutional level?
About 10 years ago we saw a lot of issues with very complicated financial products that were made up of questionable derivative component pieces. Nobody knew where they came from and what the derivatives were actually worth. And that led to a big, big crash.
And I think we have a real opportunity here to address some serious issues that, that traditional finance has again created for the economy. The tooling is in place and the protocols are in place to allow just that. That’s why I’m so excited. I think it’s just a question of ensuring we are empowering users to make the most informed decisions possible.
