The crypto markets today are highly fluid and ever-expanding. While this means the space is constantly fresh and exciting, it also means it can be hard to navigate. The vast majority of investment in decentralized currency is coming from the individual investor (also known as retail), exploring emerging crypto trends and taking on individual risk.
What’s largely missing from the world of decentralized finance are the institutional investors, the professional groups, or traders willing to leverage more capital for higher yields. For those with much larger portfolios, crypto is a relatively untapped market that will allow institutional investors to diversify and expand into the world of defi.
FLUIDEFI is one such company looking to fill this gap. Using real-time combined with historical data analytics and machine learning, FLUIDEFI presents this aggregated data in an easy-to-access and understand dashboard. This lets market makers easily invest in the pools of defi of their choosing, depending on their risk profiles. And it all happens with simple clicks, with no need to externally acquire crypto tokens.
I sat down with Lisa Loud, CEO of FLUIDEFI, to talk about what makes the company such a pioneer in the world of crypto. Loud has a long and storied history of working in fintech and with blockchain technologies, finding success at such companies as BitMEX, Apple, PayPal, and others. In 2020 she was named one of the Top 100 Women in Crypto and has been nominated for numerous other leadership awards.
What is DeFi and how did we get here?
Finance has been essentially the same for many decades – we’ve seen some innovation, but think about how the last forty years have transformed our digital lives – with personal computers, then the internet, then smartphones, the way we interact with our environment and other people bears little resemblance to what came before. And yet, the way we interact with finance is basically the same. Banks, stock exchanges, and the movement of capital have not changed very much in the past forty years.
Change comes as a result of discomfort, and for a long time those who controlled finance have been too comfortable to let anything change. But in 2008 with the financial crash, finance got shaken up, and that’s how we got started on true financial innovation in the form of decentralization. DeFi is just the next layer of technology on that skeletal foundation.
Can you describe what exactly FLUIDEFI is setting out to do?
FLUIDEFI recognizes that the new decentralized finance is the future, and that we will need infrastructure and tools to usher it in. While we are at the very beginning of the adoption curve, the acceleration in institutional investment in the DeFi space is an indication of what’s coming.
How does FLUIDEFI differ from what’s come before, or is this the first real attempt in this space?
There are many tools in both crypto trading and DeFi investment. Although it seems counterintuitive, the tools that we have all follow the same approach, because those who understand crypto are a biased group. If crypto makes sense to you, then you are not in the majority. And if crypto doesn’t make sense to you, you’re not building tools for it. So we have a self-selecting group of builders who don’t see any problems using the existing tools out there, and that limits their ability to design something that works for everyone.
FLUIDEFI is taking a different approach: we are building tools that are intuitive and delightful to appeal to those who have not yet joined the crypto club. We are focused on solving problems and meeting our customers’ needs, and that is an approach we don’t see anyone else taking.
Can you go into a little detail on how FLUIDEFI’s platform works, and what you mean when you talk about ‘pools’?
We left off saying that DeFi is the next layer on the skeletal frame of decentralization. Let’s dig into that a little deeper.
Blockchain and cryptocurrencies offered us a new way to think about ledgers and transactions – instead of having a third party validate the transactions, the entire blockchain would come to consensus about any transfer of value. But this wasn’t enough to “replace” traditional finance.
The next thing to build is a new set of concepts to mirror those offered by traditional finance. One such concept is that of a liquidity pool. A liquidity pool is the decentralized version of an orderbook on a stock exchange. Instead of having a large entity (e.g. NYSE) manage all the orders that come in from clients and match them up with each other, we have a smart contract that performs a similar function. As a trader, interacting with a liquidity pool is the same as trading on a stock exchange. You trade one asset for another, and hope to buy low and sell high, making a profit in between.
There has been a proliferation of liquidity pools in DeFi, and it’s now impossible for an individual to keep track of all the potential places to participate. FLUIDEFI functions as a discovery tool by filtering out pools that are not worth anyone’s time, and calculating dozens of real-time actionable insights to allow traders to make the best decisions at the best time.
What sort of analytics is available to clients? How do you reckon with data that is subject to huge swings in a market as volatile as crypto?
At FLUIDEFI, we focus on providing actionable insights. We believe that if something doesn’t affect your decision-making, you shouldn’t have to waste time and attention on it, so we provide analytics that are actionable: such as the risk of impermanent loss, recent changes in a pool, or news that is affecting a token value. Our data set includes 80 metrics per pool, and you can choose which ones are relevant to your trading strategy. We have a default recommended set of data points as a starting point, because learning DeFi trading is tough and we want to help you every step of the way.
To me, the spirit of crypto is empowerment to the individual investor, freeing them from middlemen. By bringing institutions into this space, are you worried at all this may affect markets, bringing it more in line with existing financial trades?
The spirit of crypto is individual empowerment. At the same time, institutions control most of the capital, and the more capital that comes into DeFi, the more we can build structures that support a new paradigm of fair and equitable distribution of capital. While institutions are attracted by the higher returns available, they will also have to adapt to a decentralized financial system where the unfair advantages they previously enjoyed start to disappear.
It’s a long process to get from where we are today to a completely decentralized financial system, but it’s worth it. We can’t quite imagine a decentralized world yet, but we can see the first few stages ahead of us. Bringing institutions into the space is a necessary step for transformation to the new world of finance.