Reef x Krypital AMA
We invested in Reef for a few reasons, first, we think Reef’s idea is pretty cool. DeFi right now on Ethereum reached a bottleneck because of the scalability and gas fee issue. We have been actively following the Polkadot development and ecosystem growing. We do think that Polkadot is a great chain to experiment on cross-chain asset trading and scalability problem solving.
Second, Reef has a superstar team that has a solid background in smart contract development and had hands-on experiences in Polkadot development. We believe they can really build up this product successfully.
What is your view on the current DeFi hype cycle?
From the data point of view, a year ago, there were less than $500 million locked in the decentralized finance applications. But Early in September, 2020, the total value locked spiked over $9.5 billion.
We can see this round of hype over DeFi starts from Lending, borrowing (MakerDao & Compound etc) and decentralized exchanges, like Uniswap. The DeFi bubble rapidly inflated in June of this year, when Compound launched its COMP governance token. Then, we had insurance and all kinds of derivatives that are on the rise in DeFi. Fueled by the hype, yield farming also joined the hot topics. One particular app that has been garnering attention is yEarn Finance, which was providing yield farmers with crazy returns of over 1,000% at one point.
We think that the initial stage DeFi infrastructure had a solid good start, and now it is time to see more and more applications could be built and innovated on DeFi, such as involving a variety of assets and cross-chain capability.
The hurtle for the DeFi development we see is from Ethereum’s scalability challenges. It probably won’t be able to be solved until a later stage of the ETH 2.0 implementation, perhaps a year or more, transaction fees aren’t likely to decrease any time soon, unless traffic drops off.
Also, another potential issue is how long the regulators will allow the DeFi bubble to keep inflating. We strictly adhere to regulatory and compliance requirements; however, currently, there is not much regulation governing DeFi applications.
What are some of your other portfolio companies?
Recently, we invested Injective Protocol, which just listed on Binance launchpad. Zyro, DeFi on Zilliqa and first project on Okex Defi jumpstart.
Findora and Oasis are also our portfolio projects which are focused on privacy computing public chains. We also invested in Wootrade which is a liquidity dark-pool project.
What do you think is the most important ingredient to success as a DeFi project?
I think to make a successful DeFi project, it’s not really depending on one ingredient. It’s a combination of a few key factors. Simply put, I would like to say, it requires Great Product + Great Incentive.
If there is no great product, no solid and robust and safe smart contract engineering, it won’t be possible to have a great DeFi project. Plus that, on the other hand, you need to have a great token economy and governance system to make the community willing to participate and build a large and healthy community around the project.
What do you look for in terms of team experience and background in the companies you invest in?
For the DeFi project, We are looking for teams that have deep understanding and hands-on experience in smart contract development. Can they code a secure and cool product for the market. Also, the team should have insights on how to build a better DeFi project and solve current problems.
Reef is the first cross-chain DeFi operating system built on Polkadot. With a seamless user interface, Reef offers its users a smart liquidity aggregator and yield engine that enables trading with access to liquidity from both CEXes and DEXes while offering smart lending, borrowing, staking, mining through AI driven personalized Reef Yield Engine.
For more information about Reef, or to join our team, Please contact us at: firstname.lastname@example.org
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