Microlending For Digital Assets With Keefe Tan Of Gennix DeFi | Soar Payments LLC
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Microlending For Digital Assets With Keefe Tan Of Gennix DeFi

Microlending is on the rise, particularly in the realm of digital assets like cryptocurrencies.

On this episode Keefe Tan, Project Director of Gennix joins to discuss the how and why of microlending for digital assets, NFTs, and more.

Listen in to hear the Gennix story, and take an in-depth look at another side of the Decentralized Finance world.

Payments & Fintech Insights In This Episode

  • What microlending digital assets really means, and how Gennix DeFi platform helps facilitate it.
  • What the benefts for lending digital assets like cryptocurrencies for borrowers and lenders.
  • What NFTs are, and how they continue to flourish.
  • Where microlending will go in the long term future.
  • Keefe’s thoughts on the future of fintech, crypto, and payments.
  • With so much more!

Featured on the Show

Episode Transcript

Scott: Hey. How’s it going everyone? Scott here with you, and welcome to another episode of “PayPod: The Payments and Fintech Podcast.” On this show, we are once again going to be turning our attention to the world of lending, but we’re gonna dial our focus in on microlending, and specifically as it applies to digital assets, such as cryptocurrencies and related financial products on a decentralized network.

My guest helping walk us through all of this is Keefe Tan, who is the project director of Gennix, which is a platform providing equal opportunity for frictionless digital asset borrowing and lending for all users in the crypto sphere. There’s a lot to cover with this and it’s really quite fascinating so let’s dive right in. Keefe, welcome to the show.

Keefe: Hi, Scott. Thanks for the introduction. Hi, everyone, Keefe here. I’ve been a project director for the past four to six months for Gennix. So, it has been going relatively well but I’m happy to answer any questions that you may have during this talk.

Scott: Fantastic. And again, thank you so much for joining us. Well, as I said at the top, today, we wanna talk about microlending of digital assets. But before diving into everything because there’s a lot to dive into, I wanna make sure we are all on the same page. So to start us off, what does microlending itself really mean?

Keefe: So to put this very simply, microlending essentially is lending out money in small amounts. This is especially useful for business operations. So if you have capital requirements for your business needs on a daily basis, then this can be a very useful form of getting a capital required.

Scott: Right. Okay. So that’s microlending. Now that we got that definition out of the way, can you break down for us, what’s the lending landscape like for digital assets like cryptocurrency and what are the benefits really for borrowers and lenders when we’re talking about digital assets?

Keefe: Right now on the lending landscape, you have your incumbents, platforms like Aave and Compound. So, in these two platforms, there is this metric called a collateral ratio. This ratio, simply put, determines how much money you have to supply or how many digital assets you have to supply as collateral before you can take a loan. So, typically, this ratio is around 200%. Meaning to say if I want to borrow 1 Bitcoin, I will have to supply 2 Bitcoin to the protocol in order to take that 1 Bitcoin, which gives me a total of 3 Bitcoin, where I can use 1 Bitcoin. So, what are the benefits for borrowers? Most people when they borrow on all these lending platforms, typically they are looking for arbitrage opportunities elsewhere.

For example, if let’s say I see an asset trading on one exchange at a dollar, and I see another asset trading at two dollars, what I will do is I will borrow assets from the protocol, bring them over to the platform where there is an arbitrage opportunity, and then I will sell it over there and make the difference. So, then I will just return the funds and then take the profit. For lenders, if you were to leave your funds sitting either in the bank, it is very common to have interest rates that are between 1% and 6%, okay, or even less than that. Some of them even offer 0.03%. For DeFi lending, the rates that you get back…or your interest rate for lending your assets is much, much higher than any bank. You can go ahead and do some due diligence, you will not find a crypto lending platform that offers worse interest rates than a bank.

Scott: So, basically, there is a benefit to both sides here. If you’re the borrower, you’ve got potential for these arbitrage opportunities. And as we all know, especially when we’re talking about digital assets, the numbers are rising, depending on the day and what we’re talking about.

So there are many of those opportunities out there. And then from the other side, you’re talking about better interest rates. I sometimes look at some of my savings accounts and I look at those interest rates, and I kind of cry a little bit because I’m like, “Oh, man.” So, as you can see, okay, there are these two benefits when we’re talking about microlending, and especially applying it to digital assets. So that’s the stage. It’s all set. What’s the story behind the Gennix DeFi platform? How does your platform really enable this lending and make this all happen?

Keefe: All right, so earlier when I was talking about platforms like Aave and Compound, I mentioned the 200% collateral ratio, that in itself is a very big hindrance for users who want to borrow money because if you need to borrow money, by following some logical thinking, it means you do not have money, correct? So then you will tell me, this is counterintuitive, and I will agree with you.

Scott: Okay. Right.

Keefe: So for Gennix, what we’ve decided to implement was trust score. So we have a trust score, right, over time, as you borrow more and more assets, especially with microloans, your trust score increases, and this decreases your collateral ratio. This means that in the long run, you can supply less and less collateral while taking the same value of the loan. This actually makes access to capital for everyone much, much easier. And how our platform enables this lending. So in order for people to be incentivized to lend, they have to have a reason to why they want to lend in the first place.

And with Gennix, we’ve solved this really, really easily by implementing staking pools. All right? So with staking pools, what staking pools are is that you lend your tokens, you get back another token that represents whatever you borrow, any interest that you’ve accrued on that loan that you’ve lent out. Then with this new token that you have, you can stake this new token and get very, very high APYs, which is you get a very high interest rate return back on the money that you’ve lent out, and this incentivizes lending on the Gennix platform.

Scott: So basically your platform has said, “Hey, there’s this lending, this borrowing, how can we make this even more attractive for both sides?” Is that kind of the philosophy there?

Keefe: Yep. Correct. Because you can’t have a situation where we have so many people who want to borrow assets, but not enough people who are willing to lend assets to the protocol. This being decentralized, there are no intermediaries, and therefore, these mechanics are required for a platform like ours.

Scott: Right. That makes sense, too, in the fact that, you know, yes, there’s so much activity going on in the digital asset world, but it’s still up and coming. There’s still more people that are finding out about it, getting in, what have you. So anything you can do, I would think to sort of widen the pool or the appeal of available borrowers and lenders is a good idea, right?

Keefe: Yeah. Yeah, most definitely.

Scott: So, another piece of this, as I was looking at Gennix, and this is surprising and I’m kind of embarrassed that we have yet to really dive into this on this show, but you know what, better late than never, NFTs, we have not talked about this on the show, but I know that Gennix is selling them. Can you break down what an NFT is and what makes them so powerful?

Keefe: Sure. In the crypto space, if that’s what you want to call it, NFTs are all the hype. Okay. Right now, a lot of NFT projects are selling out. They’re doing very, very well. You can see the popularity of NFTs increasing exponentially every day. NFT actually stands for…it’s a non-fungible token. So in order to understand what that is, it is important to understand the concept of fungibility. So, it’s actually just an economic term that, simply put, means that if I were to swap, let’s say you have a dollar and I have a dollar, and we exchange this one dollar, both of us still have one dollar.

So that means that it is fungible. So it just means like swappable, in layman terms. For non-fungible NFTs, I guess an example I could use would be a painting, let’s say Mona Lisa. Okay? So let’s say you have the original Mona Lisa, and I have a very, very good fake of a Mona Lisa, you bring it to the appraiser and the appraiser doesn’t know which one is the real one. So this causes an issue. And this is where NFTs come in to fix this issue. NFTs, in short, they represent digital ownership of an asset. So, back to the example of the Mona Lisa, if these two Mona Lisas were on the blockchain, and they were NFTs, it can be verified and publicly visible on the blockchain that your NFT of the Mona Lisa is a real one and mine is the fake and that is what makes it so powerful, and have many applications across so many different verticals in crypto.

Scott: I mean, there it is, that is so powerful. And yeah, hype is the right word to use for NFTs because we’ve heard so, so much about it. You know, just the concept of can you have an NFT for, you know, Michael Jordan dunking in the NBA Finals? You know, all these types of things we keep hearing about. So, I guess, can you kind of expand on what Gennix’s NFTs are all about and kind of what that…? Where do you guys come into the play when we’re talking about an NFT?

Keefe: Yeah, sure. So for Gennix, what we’ve actually introduced is NFT yield boosters. Okay. So let’s just backtrack a little bit. Right now when you go on OpenSea or some very popular NFT marketplaces, you might realize that a lot of the NFTs, they are collectibles. And with collectibles, although yes, they may have some intrinsic value that may be unlocked in the future, due to this…like the sheer volume of NFTs that are created every single day, there has to be something that makes the NFT truly unique and different from all other NFTs. And for Gennix, what we’ve introduced is NFC yield boosters.

With these new boosters, simply put, right, when you stick this NFT, your amount that you can stake, let’s say you stake your tokens on the protocol, you will get a higher interest rate back or higher APY, as we call it, annualized percentage yield, back on your tokens that you stick. On top of that, the NFT holding the NFT, they will give you token airdrops every month and you will also receive platform trading fee discounts. So, these NFTs can actually be traded on a secondary marketplace. Meaning that let’s say I decide that, okay, I found a platform that offers me a much better yield and I don’t want this NFT anymore, I can actually just go on to an NFT marketplace, list it over there for sale. And because it has utility, meaning that it has a function that is useful to people, that sort of guarantees that someone else would be willing to buy it on the other side.

Scott: That’s fantastic. And once again, it goes back to what we were talking about earlier, the idea of just saying, hey, how can we incentivize more participation, how can we make this more appealing for folks to, again, participate. Now, a lot of this too, I think connects to maybe a frictionless experience. And we talk about frictionless experiences, ad nauseam, here in…on this show and in the world of payments and fintech, because it’s so crucial. And I know Gennix really aims to have that frictionless experience for your users. Keefe, how do you accomplish that and why is friction so important to reduce?

Keefe: All right, so first, I’ll just say the internet, it removes friction. On the internet, everything is much faster, much easier. And fundamentally, it is a lot different from the analog world that we live in today. So, these frictions can be things such as like when you’re doing a remittance service, there is like a three-day waiting period for when you send funds out of the country to when the receiver receives the funds.

So that is an example of friction that exists in the world today. And with Gennix, how we have attempted to remove this friction is by going on to relatively faster blockchains, such as the popular and interoperable Binance Smart Chain. So with this implementation on Binance Smart Chain, all these transactions that we are doing, they are so cheap, and they are so quick. Literally within 10 to 15 seconds, right, your transaction is completed. And you can also be verified on the blockchain. So, I guess really to just to answer your question, just by being on the Binance Smart Chain, it more or less creates a very, very frictionless experience for all our users.

Scott: Right. It’s baked into the very thing, which is so, so, so critical.

Keefe: Correct.

Scott: We’ve been talking a lot about digital assets, DeFi. These are new technologies. This is new finance. How do you see microlending for digital assets impacting and continuing to impact more traditional financial organizations and lending models?

Keefe: Okay. So, let’s say right now, perhaps, let’s say in a different world, you are not as successful as where you are today, Scott, and you decide that you wanna go to the bank and take on a loan, okay, let’s say to pay for an upcoming expense. And when you go there, you realize that there are so many checks that the banks need to do on you, credit rating checks, and they need to check your accessible income, and just do a whole bunch of other, like, compliance procedures that is very time consuming, and also requires a lot of human capital. So, with decentralized finance lending, right, everything is much, much faster.

Literally, all I need to do is connect my wallet to the platform and straight away, if I have assets in my wallet, I can straight away take a loan. And not only that, I don’t have to tell anyone else what I intend to do with this. Let’s say it was for a very sensitive matter, let’s say I have a surgery in the future that I don’t want to discuss, I have the right to retain my anonymity, and not to share, over-share all these small, little details.

So, on top of that, like I said earlier, with banks, the interest rate, that does not tend to be very, very nice. It’s not very attractive. Correct. So you don’t have a choice in that. So, with the rise of all these DeFi lending protocols, right, all these traditional banks, eventually, they run the risk of slowly becoming irrelevant if they don’t take action and join into the crypto community.

Scott: Right. So, to sum it up, it’s impacting it because these new financial tools and even just a very new way of lending, it really is gonna force change because of the superior experience and benefits…

Keefe: Accessibility.

Scott: …and the accessibility. Exactly. That’s a great segue to my next question here, Keefe, because many people who are either work in or just discuss DeFi itself, believe it can create a lot of change in the larger economy and society, this idea of leveling the playing field and democratizing wealth, finance, and beyond where that connects to that accessibility you were just mentioning. What’s your take on this? What’s the promise of DeFi? And can it deliver on that?

Keefe: Okay, so I guess first, I will start with the topic of leveling the playing field, okay? So, in first world countries, let’s say you wanna open a bank account. It’s very, very easy for you, you just walk into the branch, tell the teller, “I wanna open an account,” and within two hours to a day, your account is there. But imagine you didn’t live in the U.S. and instead, you live in a third world country, where let’s say access to a bank is much, much harder to get, in that case, right, the use case of crypto becomes so much more prevalent because all you need for crypto is you need a browser, and you need a stable internet connection, and there you go. Literally have your own wallet, which can act as your bank account.

So that’s for leveling the playing field. Then for democratizing wealth, I guess an example I could use here is let’s just use Bitcoin mining rigs, for an example. For a lot of the crypto mining rigs in the world, these rigs are typically located where electricity is the cheapest, which means that the people who own these rigs, they do have a stake, and they are accumulating wealth as they are approving transactions. And the whole world uses, let’s say, Bitcoin, okay? And there’s always a constant demand for all these miners.

So, let’s say me and you make a transaction. I’m actually paying a very small fee to, let’s say, someone…like last time in China, when they used to have BinaryX, someone in China would be earning my fee. And that in itself is a way of sharing the wealth. Think of it from a macro perspective, where there are thousands, if not like hundreds of thousands of people making transactions every minute. And you can just imagine how the wealth is being transferred from richer countries to not so rich countries. And this distribution of wealth is the one that creates the financial equality that we want to have in the world.

Scott: Right. I mean, it’s such a powerful concept and notion. And you can see how this is being enabled by technology, which is really exciting. It’s why I host this show, why we’re talking about this stuff right now. I mean, it’s really powerful. I want to shift gears a bit and talk about partnerships because they’re so critical in the payments and fintech world for success. What’s Gennix’s approach to both finding and establishing successful partnerships? And do you have any advice for those out there that are looking to do things the right way and grow along with others in the space? Maybe they do have, you know, an exciting new idea for DeFi or what have you, and they want to grow, they wanna find folks that they can work with. What are the keys to success there?

Keefe: Okay. So for when you’re establishing a partnership, right, I will say that it’s not a one size fits all approach. What may work for Gennix may or may not work for, let’s say, a meme token on, let’s say, the Phantom blockchain. So, first thing to do would be to identify the pain point that your project is facing. So with Gennix, we identified the pain point that for lending protocols, our main target market is people who are already…they are already customers of other platforms. And it’s very difficult to bring on someone who’s completely new to crypto and get him, you know, interested in borrowing or lending in crypto. So, what we decided to do, right, was we onboarded or we partnered up with this company called DTC, Digital Treasures Center, and they are the ones who are providing an on-ramp, off-ramp crypto to fiat conversion.

On-ramp, off-ramp just means like an OTC, like, if let’s say I want to buy USDT, I can just pay in USD or Singapore dollars, where I’m from, to get the USDT. So when deciding which company to partner with, that was a pain point we identified, that we want to bring not just crypto members, but the global community into the Gennix protocol. And that was one of the reasons why we did that partnership. And moving on to any advice to those who want to do things the right way and grow with others in the space, this one, I guess I have to give a very, very vague answer for this because there is no right way to do something. There are many, many ways, some are more efficient than others. But as long as you are not doing anything illegal, I think it’s good enough. Yeah.

Scott: Right. If you’re leading with, “Hey, let’s follow the law first…”

Keefe: Yeah, correct.

Scott: …then you’re doing good. No, absolutely. I mean, I think what’s the saying here, there’s more than one way to skin a cat, I think is what people say sometimes.

Keefe: Correct. Exactly.

Scott: So I think that that certainly applies. And when you’re talking especially about such, you know, new technologies in the grand scheme of things, you almost have to be kind of innovative and say, “Hey, it was done this way. Let’s try this way.”

Keefe: Yeah, exactly.

Scott: Fintechs also have this crucial role to play in the world of security and privacy. And without revealing too much for any would-be bad guys listening, how does a platform like yours approach these two items? If I were putting it another way, what’s your philosophy on security and privacy, and how do you put it into action?

Keefe: Okay. So, for Gennix, what we did to ensure our security was to go for a smart contract audit. So, a smart contract audit, essentially, is in-depth analysis of all the code bases in our code repository. So they check for any loopholes or potential exploits that may make the Gennix protocol more prone to being hacked in the future. So we completed our smart contract audit and had no critical findings, which was a very happy day for us, for the Gennix team.

As for privacy, the fact that we operate a decentralized lending platform, which means that you don’t even have to input your email address, so the anonymity and the privacy of people, right, is something that is very important in DeFi, and we also support this in Gennix. So, my philosophy on security and privacy, I guess, it’s very simple. If let’s say someone entrusts you to keep their funds safe, the least you can do as, say, a custodian in the decentralized finance world is to really keep these people’s funds safe, because this is their livelihood. It’s not something that is a joking matter. So security is something that we have to take very, very seriously and we will take all steps such as by doing penetration testing to protect the funds of our investors.

Scott: Right. So bottom line, not only is it baked into the very technologies that are being used, of course, that’s one of the exciting things about DeFi, but then taking those steps to say, “Hey, you know, what are our systems looking like? Are we following everything? Does it look great?” It sounds like you guys are passing with flying colors, so that’s fantastic. As we wind down our discussion here, Keefe, I wanna look to the future and specifically, you know, we’ve been talking about microlending. So, where do you see microlending going long-term, if you were to project out 5 to 10 years, so pretty far into the future, how might the ecosystem, particularly when it comes to digital assets, look?

Keefe: Okay. So, I’m just going to generalize here. In crypto, not just DeFi, in crypto, there’s always a narrative, and this narrative, typically, if you can spot this narrative ahead of time, you will be ahead of the hype and you stand to gain a lot of capital just by identifying the narrative correctly. So, the narrative changes in crypto very, very quickly. Every three to four months, you will see a new innovative project coming up that is trying to solve a new problem that is a common pain point in crypto.

So, for a projection of 5 to 10 years, right, this is going to be a huge, huge projection, microlending is going to be in our narrative many, many times and we are obviously going to see a very, very huge surge in adoption in the crypto market in 5 to 10 years. And so, I do believe that in 5 to 10 years, the crypto space will no longer be a very young space, as they often call it now. And I hope to see a widespread adoption of crypto and digital assets, even in the mid term.

Scott: I think we may just see that especially with folks like yourself and your team pushing everything forward. All right, Keefe, we have a segment that we like to end with on each and every show. We do rapid-fire questions. Are you ready?

Keefe: Of course.

Scott: Make a prediction about the future of microlending that you expect will happen in the more immediate future, say 12 to 24 months.

Keefe: Aave, $1,000, that is the prediction I’m going for. Just for reference, Aave right now…I believe the last price I checked, it was trading around $300-ish, and I think it has a potential to go to $1,000.

Scott: I like it. I like it. Bullish. What’s one cool piece of payment or finance-related technology that you’ve come across recently, unrelated directly to your company that impressed you?

Keefe: I’m just going to cover a piece of technology that has impressed me. Recently, I’ve been looking into super-fast blockchains, and this is something that has really, really piqued my interest. Initially, there was Bitcoin, which was doing like 1 transaction every 15 minutes or so, and then a decrease with Ethereum that…where in 1 minute, they could handle 15 transactions. We have Binance Smart Chain, they went up to around 30 to 50. And then now with Solana, we have 50,000 transactions per second. And with Phantom, it boasts of having up to 300,000 transactions per second and it is incredibly cheap. So you can see that all of these blockchains, right, they’re getting faster and they’re getting cheaper so in order to stay ahead of the curve, this is what we need to do, we need to join all these platforms.

Scott: What’s one piece of advice you would have for someone who’s considering the fintech industry as a career?

Keefe: I guess if you never try, then you never know. When I first started my career in the fintech industry, I was actually fresh out of university. I wasn’t sure whether this was the industry for me. But I knew that I’ve been trading crypto for many, many years and it’s always been a hobby of mine. So if you have an interest in fintech, you have an interest in crypto and blockchain, then, by all means, pursue your interests, and that way, you’ll never work a day in your life.

Scott: Last question, what’s the best business advice you’ve ever received and from whom?

Keefe: So this one, I’ll give credit to my CEO of Technicorum Holdings, the firm where I’m from. So his name is Daniel. He always says to me to dream big, to set goals, and to take action.

Scott: I love it, simple and straight to the point there. Keefe, thank you so, so much for joining me on the show today, really breaking down something that is so exciting, but maybe it could be overwhelming for someone who isn’t, you know, more familiar with it. So I really appreciate you taking the time. And wow, Gennix, a lot of exciting things going on for you guys so it’s gonna be exciting to see where that all goes. And if folks want to find out more, maybe see if there’s some borrowing and lending they could take part in or what have you, where can they do that? Where should they go?

Keefe: You can just Google Gennix and you will see right on the top.

Scott: Fantastic. Thanks again, Keefe.

Keefe: Thank you, Scott. Have a good day.

Industry Spotlight

Gennix

Gennix is a decentralized, frictionless digital asset borrowing/lending protocol that leverages Layer 2 scaling solutions in the Binance Smart Chain Ecosystem.