AMA Highlights — AllianceBlock
By Daniel Dal Bello, Director.
January 25, 2021–12 min read.
On Friday 22nd January, we welcomed Matthijs de Vries from AllianceBlock into the Hillrise Group Telegram chat for an AMA. Matthijs is a founder and CTO of AllianceBlock.
AllianceBlock’s overarching vision is to build “the world’s first globally compliant decentralized capital market” — bridging traditional finance and decentralized finance in one platform.
For execution, the team aim to reinvent capital markets with a focus on the creation of compliant derivative products coupled with their blockchain-agnostic protocol.
The protocol itself is a layered platform facilitating multidirectional data flow, compliance, and privacy.
In this post, we have compiled key questions and answers from the event.
Daniel Dal Bello
Hi Matthijs and welcome! Could you start with an introduction to yourself and how you came to be here building AllianceBlock?
Raymond Reijnders
Hi Matthijs, looking forward to learning more about your take on bringing traditional finance into the blockchain space, and to learn more about how exactly you are tackling this.
Matthijs de Vries
Hi Daniel and everybody in this channel joining! Thank you so much for having me today. I’m excited!
Sure! So I am Matthijs de Vries, founder and CTO of AllianceBlock. I’ve founded AllianceBlock together with Amber and Rachid.
AllianceBlock provides the bridge between traditional and digital capital markets for all the participants involved reflecting how the traditional finance industry would be designed if it was built today.
Our ecosystem streamlines issuance, validation and clearance while integrating a progressive regulatory and compliance framework in order to reduce costs and increase efficiency.
Basically, AllianceBlock will unlock trillions of dollars of capital for DeFi. We are aiming to be the world’s first globally compliant decentralized capital market!
Raymond Reijnders
Looking back to last year, it has been some time since your TGE and secondary market debut — this is usually when there is the most buzz around a new name in the industry.
How have you been progressing and what other significant milestones have you achieved since?
Matthijs de Vries
Indeed, TGE was in September [2020]. Looking back from that time until now, we have achieved quite a lot with regards to expanding our ecosystem.
Our ecosystem consists of partners that are needed in order to achieve the bridge that we are aiming to build. We have gathered some really great partners in our ecosystem, like Ocean Protocol, Aikon, TopJuan Tech, API3, etc. etc.
This was important for us as a foundation to get started on the first use cases for the protocol. Immediately during the growth of our ecosystem, we have started research and development on several use cases in parallel, one of which we have already shared quite some details about The Data Tunnel and Trustless and Reusable Identity Verifications, immediately leveraging the partnerships we have established (we don’t want these partnerships to simply stay just as a logo on our website).
In November we have also released our Liquidity Mining Program, now to date, over $10 million USD has been locked in our Liquidity Mining Program by the community, which is a huge milestone in itself. We see great interest from partner projects in the roadmap of our liquidity mining program, which also showed with the partner pools together with Ocean and Frontier, having significant amounts of partner tokens locked in the pools for rewards as well.
This shows the deep ties and trust between us and these partner projects!
Raymond Reijnders
You are building the ‘Data Tunnel’ in partnership with Ocean protocol, the data tunnel will allow users to publish, monetize, use and analyze data through the Ocean Protocol data marketplace. What is the incentive for users to use a tool like the Data Tunnel over sticking to their current system?
To build on the above you have a large focus on compliant data which in return reflects back on your partners. To name some: Ocean Protocol, Parsiq, Covalent, and Aikon.
Can you share some more with us about the most exciting features/products that you’re building with these companies, as well as why compliant data is so important for traditional enterprises?
Matthijs de Vries
There is actually a magnitude of use cases possible on top/around/connecting to the Data Tunnel once we have released the version after the MVP. The Data Tunnel helps companies have a hassle-free way of publishing data, monetizing it while staying in full control of their own data without needing to build a separate infrastructure for it. Definitely interesting for SMEs as well that have gathered a lot of data throughout their existence, but have no idea if that data is worth anything to others, and thus cannot easily justify spending a lot of money in order to disclose this data and monetize it. This is where the data tunnel will be a huge asset as well.
For both DeFi and CeFi it will be a huge asset in order to bring large data streams from the blockchain to “data consumers” (those that analyze the datasets or are able to build something on top of it) as the data that goes into the data tunnel will always come out in a predictable way, which means that if you have once built a product or service on a specific dataset from the AllianceBlock Data Tunnel, you will be able to extremely quickly and easily extend your product/service on other datasets from the data tunnel as well.
Raymond Reijnders
So it’s also more about the interconnecting of all these companies, creating a real “ocean” of data. That’s awesome to hear, I specifically like the focus on SMEs, as these have gone underserved for too long.
Matthijs de Vries
Exactly! We truly want to bring this ocean of data into existence, there is so much data out there that organizations do not know how to get out to the world, and so much potential in building services and products on top of that… we want to accelerate the opportunities here and innovation in that regard.
And with regards to SMEs, blockchain adoption in general and our partner Aikon, it is actually nice to maybe share something about how we leverage Aikon for our Data Tunnel (well at first, but Aikon will play a large role throughout). We see that adoption requires that users do not need to understand blockchain technology, do not need to manage private keys or MetaMask.
If these things are not necessary for everybody in order to interact with blockchain solutions, true adoption will be easier to obtain. Through Aikon we will be able to offer a Single Sign-On method that can be securely linked to wallets (for example on ETH and EOS) that can be used to interact with smart contracts. Together with a fiat gateway, this will definitely help drive adoption of blockchain-based technologies.
For the Data Tunnel, for example, this will be implemented to allow publishing and consuming of datasets possible directly with fiat and without the need to have MetaMask installed, using interfaces that are familiar to most people that use web apps in general without blockchain-based features.
And finally, an important note to mention here is that all use cases we are building now will see also the immediate utility of the ALBT token as well, where ALBT can be used directly to publish and consume data and in order to use the trustless and reusable identity verification data.
Raymond Reijnders
While reading about AllianceBlock we came across the use case article covering regulated securities offerings. As someone who has been actively participating in the security token space for several years, I’d be very interested to hear something about the companies interested thus far.
As we have seen a large number of these solutions hit the market over the past few years with the promise of companies (nanks, stock exchanges, private equity) running POCs with NDAs holding back clients from stepping up.
In short, nobody out of this relatively large group of players has really managed to gain any traction.
How are you tackling this and who are you currently planning to have use your solution?
Matthijs de Vries
We are very fortunate to have been incubated in 3 top-tier incubators in the past years, like: Level39 in London (Revolut was incubated here as well, now valued at 5bn+), Station F in Paris, and Kickstart Innovation in Zurich.
This allowed us to greatly expand our network in traditional finance. Through this network combined with past experience of founders with their careers, we have managed to have great access to traditional financial institutions that will help complete our bridge.
One such specific TradFi institution is a very, very important milestone and is not only meant to be included as just a partner in our ecosystem but help bring more traditional finance partners to our ecosystem, AND for all current partners already in our ecosystem, to connect with them as well.
So as I said, that is a major milestone and will start unlocking the full power and potential of the protocol and our ecosystem around it.
We are quite close to releasing details about this partnership, expect it quite soon.
Daniel Dal Bello
One of your use cases is security tokens. Besides issuance and built-in compliance, are you also offering tools that businesses and enterprises would use? For example, cap table management, voting and communication, secondary market?
Building on this, are you also exploring other products such as lending? As you’re already building out a security token infrastructure.
Matthijs de Vries
Yes, yes, and no for the first. These things are important in the life cycle/workflow management of any security.
However, we are a facilitator and provider of infrastructure. We don’t aim to be a fully regulated entity with regards to the issuance of securities for example AND we also don’t want to reinvent the wheel for some of these “features”.
This is where our ecosystem comes in and shows it’s strength (and thus actually also the strength of AllianceBlock as a whole). For secondary markets, there are plenty, we aim to build a protocol that secondary markets can plug into and become completely compliant because of our infrastructure and protocol, but we don’t necessarily have to build the complete secondary market ourselves.
With regards to lending, we are working on something really exciting in this regard, we believe P2P lending has a very important place that is not fully leveraged yet. Details with regards to the exact use case on this and how we aim to expand this market will be released quite soon as well (Q1 is going to be packed).
Raymond Reijnders
To end the security token talk, with AllianceBlock being Netherlands-based and some of your team members being from the Netherlands as well, what do you think of the Dutch regulatory landscape and initiatives like 2Tokens to further security token legislation and adoption?
Would also be curious to hear your take on competitors based in the Netherlands focusing on traditional finance, such as Dusk Network who have recently acquired a stake in Dutch stock exchange NPEX.
Matthijs de Vries
Interesting question. I have had meetings with DNB (Dutch Central Bank) and AFM (Dutch Financial Regulator) before and I can say that do not have the most forward-facing policy at the moment. Of course, now in the time of COVID-19, that is not the highest priority of most nations, but generally, they have proven to prefer to look at other countries in the EU and then follow them in case they seem to catch on (like Portugal for example).
This is something that disappointed me a little bit personally, but on the other hand, we are still fairly early stage with regards to security issuance on blockchain as a whole, so there is still a lot of room to go from here.
Competitors is another interesting question. We don’t necessarily think about competitors, but about potential allies. We have yet to see another project that aims to achieve somewhat the same that we can’t collaborate with instead of working against them. This also doesn’t fit the goal of building a bridge between CeFi and DeFi (and not building a bridge between CeFi and AllianceBlock 😉 ) and also not the fact that we underline the alliance in AllianceBlock.
Daniel Dal Bello
We all know how slow-moving and resistant to change traditional finance companies are — especially traditional finance behemoths. While they are now warming up to blockchain generally through Bitcoin etc., they’ve just barely scraped the surface.
The interesting thing about AllianceBlock is that it will no doubt accelerate adoption, but it may still take quite a few more years (which you have accounted for with the 5-year adoption timeline in your whitepaper).
Should real adoption only begin closer to 10 years later coupled with the growing competition? What is the strategy to remain resilient and nimble?
Matthijs de Vries
Actually, it’s not entirely true that traditional finance wants to be resistant against change or innovation (although they are definitely slow-moving haha, but that’s for most larger enterprises). We were fortunate enough to speak to many large financial institutions, and they have always mentioned several experiments with blockchain and in-house innovation hubs that focus on blockchain, etc.
The desire is 100% there, the largest problem is just the fact that using blockchain technologies for their services is completely hindered by lack of compliance with regulations, especially across jurisdictions. This is why our protocol makes so much sense, mainly the ‘Cross Border Regulatory Compliance Layer’ that will help compliance with regulations across jurisdictions to the blockchain with a progressive framework that is easily ‘updatable’ with ever-changing rules across all jurisdiction, managed by the institutional nodes. This can save many, many millions for DeFi projects that normally would need to be reserved for infrastructure needed to be fully compliant
We believe that the right way to approach this is to tackle one problem at a time, which we do through the use cases we develop. So in that sense we can attack certain specific angles, one at the time, so that we can slowly but surely drive adoption, bit by bit.
Raymond Reijnders
To crypto-natives, central bank digital currencies (CBDCs) are a taboo. However, the reality is that CBDCs will no doubt emerge in some form or way. Regulated entities, especially traditional finance companies, will be the first ones to use them to stimulate rapid adoption as mandated by governments.
Since AllianceBlock will be working with such entities, and without getting political about these differing ideologies, how do you think the project will be able to reconcile both worlds?
Matthijs de Vries
We are able to provide the means through our infrastructure and protocol to regulated entities and institutions, even governments, in the end, to bring all kinds of innovations to life. We do however make sure that our protocol remains fair for all participants involved and certain features or services can be completely independent and isolated from the rest to make sure that it always takes the best of both worlds. A small detail for example, with the Data Tunnel use case we provide a Single Sign-On Solution with a fiat gateway to use the services, but at the same time we ALWAYS also provide the option to use it completely anonymous and decentralized, so that all participants have a choice that best fits their needs.
Shak (@Saisback)
Hi Matthijs, is there anything, in particular, you are looking forward to with regards to AllianceBlock? Something maybe you are focused on the past time?
Matthijs de Vries
Yes, good question! I am most looking forward to having other startups, developers, SMEs, whatever, get started building new and innovative products on top of the infrastructure/protocol we will have in place. The most exciting feeling for me will be once there will be completely new innovative solutions being built that will help improve the world a little bit, that was made possible by the protocol we had in place. For me personally, this will also prove the success of what we will have built.
Raymond Reijnders
As a final question from my side, AllianceBlock already seems to be covering a myriad of use-cases, we’d be very curious to learn more about the size of your team, and how you’ve been experiencing working remotely throughout the pandemic, especially as you work with a large partner network and target traditional players.
To build on the above, how has the workload been thus far, and what are your plans in regards to the expansion of your team and (possible) future funding?
Matthijs de Vries
We have a team of around 15 developers currently (excluding the founders). This fluctuates a bit, as some are freelancers that come and go. We are expanding our Dutch team of developers mainly at the moment.
During the pandemic it was quite easy for ourselves to be honest, as working remotely has not been a challenge at all. We do have a very nice and large office in Utrecht, Netherlands, developers sometimes come there (with safe distance, as there is room enough, fortunately) because the team is pretty tight.
The only thing we noticed through the pandemic is that larger organizations, mainly traditional finance enterprises are moving slower now, which is understandable, they are traditionally not used to working remotely completely and are adjusting and adapting still here and there.
The workload is of course what you choose it to be, but our motto is “No Mercy”, we go all-in all the time, and have worked through a major bear market, a pandemic, holidays, and weekends. It’s not because we have so much work we can’t handle it, but because we are so extremely motivated and excited that it’s sometimes hard to close the laptop at the end of the day and let go.
Zam (@sohamzam)
HI Matthijs, greatly appreciate the maturity and commitment the entire AllianceBlock team is showing.
Do you see use cases for social impact/humanitarian efforts being built on-top of the Alliance? I feel there is a great need to truly help developing nations via the power of blockchain.
Matthijs de Vries
Yes, we have some specific plans also with regards to ESG that will have a place in our protocol (ESG = Environmental, Social, and Corporate Governance).
Hillrise Group supports ambitious Web3 startups with early-stage venture capital and fundamental research.
AllianceBlock is working towards building the world’s first globally compliant decentralized capital market.
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