Twitter Space Synopsis — February 22, 2023 — Liqwid Finance

Topic of the space is focused on Liqwid Finance, the future of defi on Cardano, and the crucial part identity solutions will play in that future.

Special Guests:

· Florian Volery (@sachs_johnny) Co-Founder of Liqwid Finance

· Tim Heidfeld (@tim_w_heidfeld) CEO, Co-Founder of IAMX

Tim Heidfeld opens the conversation with an update on IAMX. He describes IAMX as being in a transformation phase, wherein the transition from a plan or roadmap to working products occurs. IAMX has its first few products live and is focusing on launching products like vPools that have been in development.

Florian joins us from Switzerland, and has a background in banking, economics, and traditional finance (tradFi). His history in managing consultation for banks, with particular focus on strategy and new loan products, led him to venture capital and eventually blockchain.

Liqwid Finance (LQ) launched on MainNet recently and has thus far been a huge success. His motivation behind LQ was based in his desire to bring the knowledge and expertise he’s gained in tradFi to web3. LQ is a noncustodial borrowing and lending protocol on Cardano, utilizing dynamic interest rates that are based on utilization rates. LQ is set apart from other defi protocols by users’ ability to stake their ADA to earn rewards, while also earning interest on borrowed funds. In addition, LQ is built to function in a very modular, customizable interface with numerous available assets. A “safety pool” feature will also launch soon as a tool to allow LQ users to mitigate risk.

Florian addresses a question regarding the risk v. reward of utilizing LQ return rates versus the safety of Cardano staking, given that return rates right now are comparable. He stresses that LQ, while up and functional right now, is undergoing continual development and improvement. The primary use case of LQ is for lending and borrowing, and given the dynamic utilization rate of return we will see return rates become more favorable as demand to borrow assets increases.

Liqwid Finance is a non-custodial platform, differentiated from centralized services like Celsius in that control of assets remains with users, and at no point becomes the property of the LQ protocol. The risks involved in a protocol like LQ is found in the possibility of liquidity shortfalls and rising interest rates depending on the previously mentioned dynamic rates, in addition to the risk of liquidation common to all borrowing/lending.

Florian begins the conversation on the role identity and DIDs will play with LQ in particular, and for deFi in general. He starts by explaining that right now there are over 2 billion people without access to a bank account, and are not provided with tools to protect themselves inflation, to lend and borrow, etc. Blockchain and deFi will provide access to these financial tools to those who currently go without. Identity solutions will help deFi, the tools providing that access, to transition into regulatory compliance and in that way, a significantly broader scale.

He continues to explain that there are 5 building blocks that will allow mainstream adoption: Digital ID, Compliance, Stable Assets, Liquidity, and Exchanges. With these in place, all core offerings of tradFi will be accessible on the blockchain.

Tim Heidfeld adds that in the big picture, crypto and deFi have developed so far within the last few years that the world is taking notice, and treating this emerging market seriously. Given the size and scope of the industry, lawmakers are now driven to bring the ecosystem into compliance.

The goal is to comply with regulations without sacrificing decentralization or self-sovereignty. With identity tools like those developed by IAMX, we can satisfy legal compliance requirements while also retaining control of our identity. Just as there are options to self-custody one’s funds in crypto wallets, with IAMX we will be able to self-custody our identities in our identity wallet.

Tim continues to explain that IAMX solutions are designed to serve the unbanked. A large percentage of the world does not at this time have access to verifiable credentials to prove their identity, and therefor will not be able to conduct a KYC process to remain in compliance within this space. IAMX is developing proof-of-life driven technology to drive the creation of verifiable credentials for the unbanked. This will be a form of KYC that is owned and controlled by the user.

Florian sees the future of deFi & identity as a system where KYC & identified users will bring the market into full regulatory compliance, with equal regulation to current tradFi. Once this compliance is achieved, it will open the way for banks and other tradFi institutions to enter the market as well, which in its surge of liquidity will benefit and grow the deFi and crypto spaces significantly.

Tim foresees IAMX products serving populations without access to verifiable credentials, providing them with these tools, and thereby introducing them into a new world of accessible, decentralized finance. This technology acts as a basic building block behind the long term success and widespread adoption of the deFi space.

For more information on upcoming milestones in the IAMX roadmap, tune in tomorrow (March 1, 2023) for an Identity Lounge discussion with the IAMX core team: https://twitter.com/i/spaces/1LyGBqjNYbaKN