This podcast episode features Qiao Wang, the co-founder of Alliance DAO, discussing the opportunities in real-world assets (RWAs) and payments in the crypto space. The host and Chia delve into the role of liquidity in tokenizing real-world assets, the potential of on-chain lending, and the impact of speculation in the crypto market. The episode also explores the developer’s choice between blockchain platforms like Ethereum and Solana, the rise of messaging apps as potential interfaces for crypto wallets, and the significance of Coinbase’s identity initiative.
Opportunities in Real-World Assets and Payments
- Real-World Assets: Qiao Wang identifies RWAs as a significant opportunity in the crypto space. With $1.5 trillion worth of wealth stored on-chain, people are seeking uncorrelated sources of yield or returns, which RWAs can provide. Tokenizing real-world assets can offer access to assets that many people wouldn’t have otherwise.
- Payments: The second opportunity lies in payments, where people can use their crypto wealth to pay for real-world goods and services. Crypto payments are more suitable for cross-border transactions, with stablecoins like USDC being superior to Bitcoin for cross-border remittances due to their stability and lower transaction costs.
On-Chain Lending and Adverse Selection
- On-Chain Lending: Chia explains that on-chain lenders, or “on-chain lenders,” can provide loans to small and medium-sized businesses, leveraging the power of decentralized finance (DeFi) and overcoming adverse selection. This approach can offer lower interest rates to SMEs compared to banks.
- Adverse Selection: Traditional banks have more information and only select deals they want, leading to adverse selection. However, on-chain lenders are more willing to lend to SMEs, which can lead to more favorable interest rates.
Speculation in the Crypto Market
- Role of Speculation: Speculation plays a crucial role in bootstrapping the crypto network and has strong market fit in crypto. While venture capitalists (VCs) tend to dislike speculation, crypto users find utility in it, offering the potential to make money and providing a form of entertainment.
- Impact on Developer Activity and VC Sentiment: The host explains that price leads developer activity and VC sentiment. When the price of a cryptocurrency like Solana goes up, VCs become more interested, and developer activity increases, creating a self-reinforcing cycle.
Developer’s Choice Between Blockchain Platforms
- Ethereum vs. Solana: The host discusses the confusion faced by new developers when choosing between different blockchain platforms. While Ethereum has a larger developer and user base, as well as more total value locked (TVL), the simplicity and cost-effectiveness of Solana may make it an attractive choice over Ethereum.
- Impact of Developer Choices: The host emphasizes the importance of developers’ choices in evaluating the potential of different cryptocurrencies. Solana has consistently been in the top four choices for developers, even during the aftermath of the FTX crash, indicating bullishness on Solana and its developer community.
Coinbase’s Identity Initiative
- Significance of Identity Initiative: Coinbase’s identity initiative, which allows users to link their Twitter identity with their onchain address, is significant as it provides a real onchain identity solution, which has been desired for years in the crypto space.
- Impact on User Experience: The introduction of Coinbase credentials allows users to interact with applications built on top of their layer two solution without needing to go through KYC for each individual application. This feature enables the development of compliant DeFi protocols and allows for public and permissionless applications on the same layer.
- Bullish: The podcast expresses a bullish sentiment towards Solana, highlighting its simplicity and cost-effectiveness as attractive features for developers. The host also shows bullishness towards Coinbase, praising its diverse offerings and the significance of its identity initiative.
- Bearish: There is a bearish sentiment towards traditional banks due to their adverse selection in lending to SMEs. The podcast also expresses concern about the fragmentation within the Cosmos community.
- Neutral: The sentiment towards Ethereum is neutral. While it is acknowledged for its larger developer and user base and more TVL, it is also seen as potentially confusing for developers compared to Solana.