Interview: Mechanism Capital
We sat down with a Partner at Mechanism Capital, Andrew Kang, to learn more about his firm and his decision to invest in Sifchain.
“Mechanism Capital is a fund interested in all aspects of the crypto ecosystem. Our primary focus is in DeFi — Decentralized Finance (sometimes also fondly referred to as Degenerate Finance). The firm’s main goals are as follows:
1. Support the buildout of completely new financial systems and applications on public blockchains
2. Advance the field’s understanding of cryptoasset value capture, incentives and mechanism design”
1. Why did you invest in Sifchain?
We believe that the world will be multi-chain. Thus, decentralized cross-chain value transfer is a massive and untapped area of opportunity. We’ve also known Jazear (CEO of Sifchain) for some time since he was working with Thorchain. Being one of the top experts and early researchers in cross-chain interoperability, we have confidence backing him.
2. What is your thesis on the future of decentralized exchanges (DEX)?
DEXs will continue to grow extremely quickly as more assets are traded there. In addition, the DEX space will be where innovations in exchange and automated market making technology occur.
3. What is the value add of your firm?
Having been active community members in early DeFi projects such as Synthetix and Thorchain, we have seen a lot of the trials and tribulations that all DeFi projects face. We offer insights and best practices into token design, tokenomics, monetary policy, liquidity mining, etc. We are also large traders in both DeFi and CeFi (centralized finance) so we are able to provide the perspective of power users.
4. What are some of your contrarian views on DeFi in 2021?
Founders should aim to be anonymous if possible. Flat decentralized autonomous organizations (DAO) are ineffective organizational structures. DAOs need to shift a bit more to the centralized end of the spectrum with key people having more executive ability. Fair launches are not really fair and are bad models to launch tokens.
5. What are some ways to bootstrap community engagement for DeFi projects?
Proactively rewarding contributors of all kinds and communicating a process for doing so. For example, rewarding those that create ecosystem tools, those that create memes, those that create educational material, those that help with governance proposals, etc.
