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March 1, 2021

Market Spotlight

Bridging the Gap Between Traditional Finance and Crypto w/Ava Labs

Featuring

Teana Baker-Taylor
General Manager UK, Crypto.com

John Wu is president of Ava Labs, which is behind the Avalanche protocol and which recently partnered with Coinscrum. He joined host Teana Baker-Taylor to discuss the intersection of traditional financial markets and the blockchain space.

John hails from the traditional financial world where he was part of a well-known fund. He also ran his own fund, and once he started investing for himself realized that individual investors have no access to the benefits, services and products that are available when you work for a major fund.

(1:31) “It’s kind of not fair that the individual investor who is very skilled cannot get access to the products and services. There’s a lot of barriers for workflow as well,” said John.

He’s been invested in crypto for about seven years now. He has done his share of IPOs but nothing was like the ICO boom of 2017. It was incredible, but in the U.S., deals were all illegal raises. So he had the notion to go out there and try and make it legal for U.S. investors to compliantly participate in deals. In doing so, he realized just how many barriers there were and how the tech needed to improve.

(2:45) – “One of the killer apps that I think is going to happen just like email was for the internet is issuing assets, digitizing assets, transferring the right of ownership to a blockchain-enabled digital asset. Issuing those assets, helping people exchange those assets,” said John.

He had known Ava Labs CEO Emin Gün Sirer for a while. The Ava Labs team was creating Avalanche, “a highly scalable blockchain platform for decentralized applications and enterprise blockchain deployments.” With that, they will make issuing assets a lot easier.

Merging Traditional Finance & High Tech

(4:27) When John joined Ava Labs, there were 14 people, most of whom are computer scientists. Now there are over 70 people on the team, and he brought in the business team. When hiring, one of the things he looks for is people who have experience in traditional finance and also crypto, and that theme carries throughout every functionality at the organization. The company is looking to have that bridge between the traditional process and the spirit, mindset and entrepreneurialism of crypto, which is not a large subset of people to find.

(8:28) “One of the underlying premises for people to bridge this gap from traditional to crypto is people who are open-minded and who are willing to look at the other side, not just their own,” said John.

Making Smart Contracts More Trustworthy

Smart contract security is a problem that the whole space is facing. One thing that Ava Labs has done is move some of the control from just the smart contract level to the network level. That does a little bit more to provide greater security.

(17:34) “It’s a space we’re actively researching on…Not just us, everyone in the space has to worry about the security with smart contracts,” said John.

Ethereum Compatibility

Avalanche is compatible with Ethereum and is running the Ethereum Virtual Machine. They have a community-led bridge, AEB, which is run by real layers and administrators outside of Ava, who are bringing assets over. Ava has more than USD 100,000 of assets now doing transitions. The Ava team has looked at it and it can be done with other first layers as well. 

(21:47) “We love Ethereum so don’t get that wrong. Ethereum is our friend. We see a world similar to the way social media played out, there will be ‘winner take most’ and then there will be dedicated social networks equivalent to TikTok, Snapchat, or Clubhouse. And many of us are going to win. And therefore we will need interoperability,” said John. 

Early Use Cases

The first use cases on Avalanche involve DeFi developers trying out the network’s speed and scalability. 

(21:34) “I encourage everyone listening here to try it out and test it out. And if you don’t believe that we can do 5,000-6,000 transactions per second, just come in and check it out, said John. 

Ava Labs has made Avalanche very flexible with the enterprise guys in mind. They can go Solidity.  

Avalanche-X

Ava incentivizes people who want to build features on their chain. In addition, they have people who come to them with ideas to build on the functionality or DeFi projects on the chain. 

(27:37) “We have a grants program and…we kind of think of it like moonshots. We’ll give great talented young developers a chance to go and develop,” said John. 

They would love to see a team that’s married between a great crypto developer type person and someone with traditional finance experience and can integrate both minds and credit a product that can cross over. 

Market Trends

(28:38) Recent corporate treasury moves toward bitcoin from the likes of MicroStrategy, Tesla and Square have been exciting. But according to an analysis, companies are sitting on USD 1.3 trillion in cash on their balance sheets, so there’s still a long way to go, noted John. 

Something that got lost in the Tesla announcement was Elon Musk saying that someday this could be a payments mechanism for driverless cars. 

(29:”25) “I don’t think it will be bitcoin ultimately. Ultimately It will be someone like Avalanche where we have the scale and speed,” said John, pointing to the rise of 5G and IoT technologies coming to fruition and the need for a la carte micropayments.

In terms of what people think of DeFi, they are curious. They are thinking of DeFi in the same way that they thought about bitcoin in 2017 and want to know how they can make money from it. Some of them, however, are starting to think about what is happening underneath the price level and asking ‘what’s the functionality and why should it exist? 

(31:56) Given how regulated banks are, they can’t pursue DeFi in earnest. But Wall Street is watching it despite the fact that they are handicapped with certain things due to regulation.

Roadmap

(32:50) Ava Labs is in the market for more high-quality developers and engineers. But they are looking for people for just about every function in the firm.

Visit AvaLabs.org to view the potential hirings. 

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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