DeFi Base Camp: Cohort 1 FAQ
What is DeFi Base Camp?
DeFi Base Camp is an Accelerator Program created in collaboration with Outlier Ventures, the leading Web3 accelerator. This partnership aims to amplify DeFi innovation by leveraging both ours and Outlier Venture’s existing network of builders, investors, and smart contract developers to help launch a new breed of next-generation DeFi applications. More info can be found here.
Author: Amber Shi
Obey | Website | Twitter
Obey is a gamified music futures-like marketplace where hip-hop culture fans can monetize music taste by betting on the success of a song.
The current music industry has an imbalanced profit distribution with 70% of royalties being controlled by the top 3 corporations. Additionally, the $2.4 trillion revenue generated by music streaming is not shared with the consumers. Even with impeccable music taste, users can’t monetize the passion, time, and energy they put into following the artists and music. Obey aims to solve this problem with a creative and imaginative approach.
In the form of futures contracts, users can bet against each other on the increase or decrease of a song’s future streaming revenue in order to earn rewards. The winner’s rewards are visual presentations of hip-hop music in the form of NFTs, meaning users can enrich their hip-hop NFT collection by playing this music futures game. Those NFTs can then be traded on a marketplace for profit or linked to social media platforms for bragging rights.
This is an interesting solution not only because it is creating a financial derivative that does not yet exist in the music industry, but also because the traders in this scenario are playing a social game. The traders’ proceeds are not just a number, but also a trendy-looking NFT collection that can be a part of an individual’s social branding. The market hasn’t seen a creative solution like this as most of the available products are using NFTs as a representation for partial ownership and revenue share of a song.
The Obey team is well-positioned to launch this product as the founding team brings together financial, tech, and music domain knowledge:
- Caroline Anjorin: previous experience includes 9 years at Goldman Sachs as a software developer and an executive director of payment engineering and cash settlement technology.
- Ygor Francisco: launched 8 media businesses at MTV.
Sumeria | Website | Twitter
Sumeria Labs is building a permissionless NFT lending/borrowing protocol with a pool-to-peer approach. Each pool contains a diverse NFT collection to mitigate price volatility.
Current NFT trading volumes are ~$30b annually with only $70m in NFT-collateralized loans, and the NFT market is expected to grow to $200b by 2025. Only capturing a tiny share of the market would still result in Sumeria having a relatively high TVL.
Sumeria has recently raised a pre-seed round from a number of venture capital firms (not disclosed). The focus of the team right now is to verify the robustness of the pricing models and liquidation methods, partner with a blue chip NFT first collection, and to get the minimum-viable-product out and start iteration with users.
The team at Sumeria Labs brings together a combination of finance, art, and tech expertise:
- Sy: has a CFA and >10 years of Tradfi experience at Barclays and JPM.
- Michael: a former Art Historian/Museum Curator and current innovation researcher at Harvard metaLAB.
- Zillian: a Harvard CS Ph.D. candidate, an ex-Research Assistant at Stanford, and a previous founder of the SupremX Protocol.
- Jimmy: a previous founder of the SupremeX protocol.
Diversifi | Website | Twitter
Diversifi is a cross-chain liquidity Layer 0 that enables fast, secure, and cost-effective liquidity transfers between all blockchains.
Historically, cross-chain liquidity protocols have suffered many exploits involving millions of dollars as the technology was still in its infancy. Even in its current state, the top protocols aiming to solve cross-chain liquidity have notable flaws that affect scalability, efficiency, and most importantly security. Diversifi aims to solve this problem by incorporating Intel SGX for secure key management, one-sided liquidity pools to prevent impermanent loss, a native consensus mechanism to ensure random selection of validators, and more.
Ethereum is currently at 65% dominance of liquidity, but that number was 95% only 16 months ago. In second-place, BNB Chain has $11b TVL followed by Avalanche at $10b, Solana at $4.5b, and so on. When looking at these stats, it’s safe to assume that more chains will reach relevance in the future and that more yields, games, and protocols will come — increasing the need for a secure cross-chain liquidity solution.
The three co-founders are very experienced in tech development and business leadership roles in Israel.
Lazy Trade | Website | Twitter
Lazy Trade is a one-stop shop for crypto portfolio management. Its Chrome extension identifies a token ticker on any webpage (e.g. Twitter) and allows the users to trade the token on both centralized and decentralized exchanges without needing to leave the original webpage. It currently supports Uniswap, FTX, Kraken, Pancakeswap, and Binance. It also has integrated with Twitter and Telegram chats to offer sentiment analysis. The founder, Jaimin, is a talented developer who has a Master’s in Computer Science from both USC and Imperial College. He was a machine-learning engineer and a Gitcoin Kernel fellow. The founder originally built this tool for himself to better track his orders and now wants to scale it to other users. You can find the product demo here.
In terms of market potential, the number of unique addresses participating in DeFi has grown exponentially from 130K in March 2020 to 4.4m in only two years. If you look at centralized exchanges as proxies, Coinbase has 98m verified accounts and there are approximately 300m crypto owners around the world. We can assume that the number of people who want to trade crypto and the number of active DeFi participants will grow.
Bright Union | Website | Twitter
An insurance aggregator that offers the best policy. Its Bright Risk Index product allows the users to provide liquidity to a variety of insurance providers and earn yield from the coverage premium. It also offers an SDK that DeFi protocols, DEXes, and wallets can easily integrate within 3 lines of code — making the insurance process seamless for the end-users.
The Terra/UST explosion ended with ~$3b worth of BTC being burned in vain and an estimate that holders of UST and LUNA had lost a total of ~$42b over the past few weeks. The industry as a whole, i.e. both users and protocols, have now come to the realization that risk management should be a necessity.
In December of 1930, a small merchant went to the bank of the United States Bronx branch to sell his stock. He was told that the stock was a good investment and that he shouldn’t sell. He took it as the bank had refused his request and shared his experience with the New York Times. Within hours, a crowd had gathered outside the bank and 3000 depositors withdrew a total of $2 million that day. That same month, New York’s Bank of the United States collapsed and became insolvent.
The silver lining that came out of the bank runs was the installment of the FDIC, an agency that guarantees that depositors get their money back in the event of bank failure. What is worth pointing out is that the FDIC is not funded by depositors but by banking institutions. This installment has immensely stabilized the banking industry in the US. Depositors nowadays rarely worry about the safety of their funds in the bank account.
The core of the FDIC is insurance. In DeFi, the same concept is relevant as protocols and/or end-users pay a relatively small fee to protect user funds.
Bright Union addresses both sides of liquidity provision (supply) and user insurance (demand) in DeFi. The demand will continue to grow from bottom-up as DeFi approaches mass adoption, while the supply will come from anyone that chooses to be a liquidity provider via Bright Union’s Risk Index, which automatically diversifies the risk portfolio by providing liquidity to integrated insurance providers such as Nexus Mutual, InsureAce, and Ease.
The product not only provides a solution to the growing demand for DeFi insurance, but also places an emphasis on wallet, yield farming, and DEX integrations — all of which the current DeFi Insurance landscape lacks.
IdentDeFi | Website | Twitter
IdentDeFi aims to enable participation of institutions in DeFi protocols by simplifying the complicated KYC compliance process and offering a better alternative to the fragmented approach currently seen across DeFi.
There is no standard KYC/AML process in DeFi at the moment and the current approach relies on various parties providing exclusive services to secure the blockchain. In July 2021, Aave launched Aave Pro KYC’d pools — separate from existing liquidity pools in order to comply with regulatory requirements. These Walled Gardens, as the IdentDeFi founders call them, limit liquidity to a small number of institutions, limit the composability to one protocol, and concentrate the compliance risk to one KYC provider. This is the problem IdentDeFi seeks to solve in order to enable widespread adoption of DeFi markets by institutions.
The two founders, Casper and Paul, bring together TradFi and technical experience. This team was also among the winners of the ETHDenver Hackathon in Feb. 2022:
- Casper: an ex-investment banker at CitiBank and ex-security trader at J.P Morgan.
- Paul: a full-stack engineer in Web2 and Web3 and previously founded Concept 11 Studios, a software development agency.
