Michael Quartey and Lukas Bruell, founder and co-founder of Eczodex, join the show this week to riff on how Eczodex are enabling investors to unlock more returns with traditional investments through DeFi (decentralized finance).
This episode of MoneyNeverSleeps is sponsored by Philip Lee, one of Ireland’s fastest-growing corporate law firms and expert advisors at the heart of the Dublin and London start-up, fintech and crypto communities.
Eczodex are the ninth of the founding teams forming the Launchpool Web3 Techstars Accelerator Class of 2022 that we’ve got on the show in the lead-in to Demo Day in Dublin on June 30th.
In this episode, Michael Quartey and Lukas Bruell talk with Pete Townsend and Eoin Fitzgerald about:
- How their backgrounds uniquely prepared them to bring Eczodex to life
- How Eczodex will bridge real-world assets into DeFi
- Enabling yield enhancement strategies for real-world investor
- Connecting the Eczodex vision with the realities of the crypto markets
- Breaking down the problem for individual investors
Michael Quartey on the intersection of experiences that led him to the Eczodex idea:
“I always was an entrepreneur at heart. I always had this ambition of not wanting to make my way up the corporate ladder. I always wanted to do something. So even a couple of years into my graduate job [with CSC Financial Services, now DXC], I was thinking of ways in which to build a business. At the time, it was an eCommerce startup that I was working on with my brother.
“And similarly to now, the market crashed, and then we had the dot.com bust. We weren't as far advanced as we are with Eczodex right now, so at the time, my brother and I decided to stop. That led me into contracting and I built on the skills I had learned through CSC to work for over 20-plus years in the financial services space.
“Once I understood what was going on with decentralized finance, I had this epiphany where I realized how much better the infrastructure could be, how much more efficiently things could run using all of the innovation of blockchain technology and decentralized finance. That's one of the sources of inspiration behind Eczodex.
“The other [source of inspiration] is just down to my own inadequacies as an investor, specifically with stocks. Over the years I've experienced the highs and lows of investing, and that was another spark behind this idea of trying to find a better way to invest in products with more predictable return patterns.
“Once I realized that there were many crypto projects also trying to address similar issues around risk and volatility, I started reading their whitepapers. I realized that not only are there other people trying to solve similar problems but there's all this amazing innovation going on. Why not look at this space more closely and try to build something here?”
Lukas Bruell on his entry point into entrepreneurship and meeting Michael Quartey at the University of Cambridge:
“I wanted to build a venture and gained my first experience by setting up a research venture with my roommate helping students understand what's happening in financial markets. Planning that as a business, we just literally aimed to solve a problem. We did that by concisely publishing reports about M&A deals and found that we helped a lot of people.
“That was the first time where I realized there is an incredible opportunity to solve problems out there and there’s nothing more exciting than doing that.
“I then realized that I wanted to be an entrepreneur for sure. When I got to Cambridge, I saw the incredibly powerful nature of crypto to an even greater level. I was interested in crypto for a while, I was reading about it, investing in crypto a bit, but I certainly wasn't involved in building ventures in crypto.
“But then I met Michael, and he had an initial draft of the Eczodex solution, and I also met a lot of people in the Blockchain Club in Cambridge. That’s when I started to dig deeper and deeper, went down the rabbit hole and finally ended up in the crypto space full time.”
Michael Quartey on the foundational elements of Eczodex:
“We went into Techstars [with the vision] of building the next generation of financial products by building on top of the exciting innovation in the DeFi space to create products that would ultimately serve the mass market. We are still very much staying true to that vision.
“One of the lessons learned through Techstars is that although we had spent a lot of time working on product concepts and designs, we hadn’t done enough customer discovery. So, we went out and talked to as many people as we could about their pressing needs to figure out our ideal first product for our customer base.
“One of the biggest pain points we found is the separation between the worlds of traditional finance and decentralized finance. They’re completely different worlds with different mindsets with the two worlds not connecting.
“Ultimately, the value add will come from building that bridge between the two worlds and in doing so creating products that deliver real value by leveraging the best of traditional finance and decentralized finance.”
Michael Quartey on the Eczodex product vision:
“We are building a product that will allow customers to leverage their traditional financial investments - stocks, ETFs, bonds, or whatever - to get into the world of DeFi without having to spend additional cash by using those investments as collateral.
“We will execute strategies on behalf of our customers ranging from low risk to medium risk, all the way up to high-risk strategies, where they can benefit from yield-enhancing opportunities in DeFi.”
Lukas Bruell on connecting the Eczodex vision with the realities of the crypto markets:
“It was a pretty clear pattern we saw that this [TradFi to DeFi] bridge doesn't exist. That is problematic for the more traditional family offices that are used to traditional financial instruments and that's why we became more and more convinced that there is a great opportunity to tap into [that problem]. That’s what led us to the current product design.
“Looking at the market right now, you can borrow cash with crypto. But you cannot borrow crypto with all of those trillions of traditional financial assets – there is a massive opportunity to tap into that space.”
Michael Quartey on breaking down the problem for individual investors:
“One other thing we learned is that people are busy. They've got their everyday lives to deal with - raising the kids, paying a mortgage, working full time, and whatever else they've got going on.
“So as much as they might be interested in this exciting new world [of DeFi] it's just impossible to keep up with the pace of innovation and understand why there are additional yield enhancement opportunities with DeFi compared to traditional finance. So, we took those pain points and that mindset and shaped a product around it.
“In the conversations we've had, there seems to be high desirability for this type of product. People seem to get it and can see the benefits of putting their assets to work.”
Michael Quartey on observing what’s happening in the crypto markets right now:
“There are lessons to be learned. We are learning every day about the potential pitfalls of some of the business models that are out there. There is no doubt that while there's all this amazing innovation, there are also some experimental business models that may not be sustainable. And the trick is to learn as much as possible about those models and avoid that path.
“Our vision is genuinely to deliver a sustainable business that creates real value in the long run and has a solid foundation so that it will not crash overnight in a macro downturn.
“People are looking for trust. They're looking for credibility, they're looking for reputation. And I think there is a great opportunity, particularly in crypto, to build a venture around those values.”
Lukas Bruell on thinking beyond the Eczodex product itself:
“We strongly believe that it's not just about the product, it's about what the product wants to express, what it wants to solve. That obviously includes not just some fancy product designs, but it’s also very much about security, credibility, trust, reputation. In this market right now, it becomes more and more apparent how important these things are.”
Episode title inspired by ‘Money Maker’ by Ludacris and Pharrell Williams
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