Primitives in finance — 2

Yesterday, we had written the set of primitive libraries that we will be publishing next week (a bare bones MVP version to start with). I wanted to expand on how we arrived at that set of ‘primitives’ —

Going back to our vision — ‘Hypto is building the tech infrastructure for finance as primitives that empowers developers to build (assemble) any new financial use case’

How did we land here? I am going out on a limb and assuming you have read our origin stories and our vision documents we have posted. If not, I recommend reading the below links to get a summary in 30–40 mins —

We are Hypto — 1
https://medium.com/hypto/we-are-hypto-and-its-day-0-c132091344bd

We are Hypto — 2
https://medium.com/hypto/we-are-hypto-and-its-day-0-part-2-71d6c9a5f6e

Non linear thinking
https://medium.com/hypto/non-linear-thinking-bfead3c97c01

Funding announcement story articulating what our vision is —
https://medium.com/hypto/build-financial-products-that-your-customers-love-223d38ec7d0

Primitives in finance — 1
https://medium.com/hypto/primitives-in-finance-part-i-2c562c3cdec4

Thinking in primitives — 1
https://medium.com/hypto/thinking-in-primitives-1-ca391c122431

Thinking in primitives — 2
https://medium.com/hypto/thinking-in-primitives-2-31512f07d6c6

Build in public — 1
https://medium.com/hypto/build-in-public-1-64eaea369ac1

So, our motivation to build tech infrastructure for finance came from —

→ Our thinking from 1st principles to re-imagine what finance means today
→ We had built a core suite of infra for our existing payment aggregator product that was handling huge scale (we process over 8 Mn transactions and over $3Bn in a month)
→ We were seeing many companies investing significant resources to re-build the same infrastructure from the ground up
→ No new financial products were created in multiple decades, innovation was happening only in the distribution & presentation layers but not in the core financial layer itself
→ There was no collaboration in the finance domain — every entity was operating in closed manner, there was a lack of learnings leading to a stagnating eco-system

If I had to summarize the above in a single line —

“Finance was operating as a zero-sum game,

we were making it a positive sum one”

How did we arrive on the set of primitives that we had listed in yesterday’s story?

When we started thinking from 1st principles, we found that some of the problems we were trying to solve were already thought through in the web3 world over the previous decade. So, it made a lot of sense for us to take inspiration from the decentralized world and make it work in the centralized one. This is why we ended up listing the earliest form of our primitives as —

1. Assets — this is a way to create and manage any form of asset. It can be a fungible one like a currency or a share or a ESOP or an internal token as well. It can also be non-fungible such as a movie ticket, your identity document or a creative product such as a song or a movie or an image.
2. Storage — this is the library to help create a ‘locker’ (I specifically did not want to mention wallet as we denote that for web3) that can be used to keep any form of assets or units of an asset.
3. Transaction — this is the atomic unit for when an asset gets moved from one storage to another. It will be capable of supporting multiple functions independently (queryability, concurrency, idempotency) or in conjunction with the other primitive libraries.
4. Connector — the set of libraries and frameworks that will help your code (financial product) interact with the external world.
5. Contract — this is the equivalent of the ‘smart contract’ in the web3 world. However, to be honest, we are yet to come up with the concrete set of requirements here and it will be a few weeks before we are able to launch the MVP of this primitive.

While the above primitives were inspired from the decentralized eco-system, we also found there are many problems that have been solved from first principles in the centralized finance (CeFi) space which can be adapted to the DeFi world. We realized the need for an infrastructure that interfaces between CeFi and DeFi seamlessly and acts as a bridge.

This is possible only when both eco-systems speak the same language/protocols and that is the problem we are trying to solve by thinking in primitives for finance.

And as ever, we are looking out for help from folks who can help us achieve our vision. Write to bestdaysofyourlife@hypto.in if you find this exciting and want to contribute in any capacity :)

PS: We also are taking a step back from our approach of publishing a story daily. We find that by writing on a daily basis, it helps us create a consistency of documenting our thoughts but the quality of our output is not at the level we want it to be. We do prefer quality over quantity — hence, we plan to publish stories at a lower frequency but of much higher quality and with more research and thought put into it. Once, we are able to publish a few stories of the required quality, we will know what is the approximate timeline it takes for us to publish one. We will commit to a frequency of publishing once we get that information.