EXANTE Co-founder Anatoliy Knyazev in an interview with Russian media outlet RBC talked about central bank digital currencies (CBDC), DeFi-lending and the advantages of zero-knowledge proof in traditional economy.
Here are all the key points from the interview:
Many people right now are waiting for the launch of crypto yuan, believing it can be a real breakthrough that can change the financial industry. However, the EXANTE's Co-Founder believes that "no one should have any illusions about cryptocurrencies from central banks."
"The transition to new technologies is great, but if the product itself does not change much, there will be no revolution," Knyazev says.
He also believes that the technology itself will hardly give consumers any advantages. On the contrary, the banks are still the main beneficiaries.
In February, the value of assets locked in decentralized finance (DeFi) applications and protocols exceeded $1 billion for the first time. MakerDAO is still the most popular app in the DeFi ecosystem, with a dominance rate of almost 60%.
According to Knyazev this is where a breakthrough can happen.
"Enterprises need investments and loans, this is how the modern world works. Moreover, the credit system is based on ancient powerful networks from regulated banking organizations to various things such as Hawala," he added.
If in traditional finances the problem of trust is conditionally solved, in the cryptocurrency market there is no centralized mechanism that could replace trust when issuing a loan.
Of course, DeFi projects are developing that work without trust and credit risk, but they require full prepayment. The same scheme works in traditional finance. For example, when trading securities, a trader takes a loan secured by his securities, the value of which exceeds the size of the loan.
A major breakthrough will occur when a decentralized network that can support lending appear. At the same time, it should be cheaper and faster than traditional credit networks.
In a situation where a loan is issued, it becomes necessary to know certain facts about the borrower. Technologies like zero-knowledge proof can solve this issue.
One of the properties of the identifier is reputation, the presence of a third party that can vouch for the borrower financially. If there is someone who is ready to return part of the borrowed amount, it is much easier for a lender to give a loan.
The winner is the one who comes up with the loan-focused blockchain, Knyazev says.
"Banks do not earn on deposits and transactions; their only way to make money is loans. Those who create technology that allows them to issue loans efficiently, quickly and cheaply will make a fortune," Knyazev adds.