DeFi vs Onchain Finance: Where Will TradFi Land? | Benedetto Biondi | Folks Finance [EP. 329]

[00:00:00] Benedetto Biondi: Cyberpunks that would believe that in a nice, naive way, I would say, that everything will be onchain, decentralized, permissionless. I think we grew up and we can see right now that DeFi is adapting to TradFi. TradFi is adapting to onchain finance, I would say, rather than pure DeFi.

[00:00:21] Benedetto Biondi: It's nothing bad but it's not using DeFi.

[00:00:24] Pete Townsend: This is Money Never Sleeps, sharp riffs, big ideas, and real insights from smart people. I'm Pete Townsend, GP at Norio Ventures. Let's go.

[00:00:35] Pete Townsend: My guest today is Benedetto Biondi, co-founder and CEO of Folks Finance, a cross-chain lending protocol. Ben trained as a mechanical engineer in Milan, and he lives in Singapore these days. Back when I was running Techstars Web3, Ben was one of our mentors.

[00:00:51] Pete Townsend: So Ben, welcome to Money Never Sleeps

[00:00:55] Benedetto Biondi: Thank you so much, Pete. And I love the title. I also never sleep.

[00:00:59] Pete Townsend: That's awesome. That's awesome. Listen, we have a few things going on this week, and I wanted to pick your brains on it, so thank you for jumping in to do this with me. And this is really from a high level on the topic of that I'd always seen decentralized finance or DeFi as the alternative that TradFi would eventually fold into.

[00:01:18] Pete Townsend: But with a couple of things that I've seen this week, I'm less sure about it. Do you think based upon your view of the world, Ben, that the DeFi native crowd actually care about TradFi coming onchain?

[00:01:32] Benedetto Biondi: I mean, I've been in DeFi for seven years now, and I would say that at the very beginning, who joined it very early was very how to say, revolutionary about that.

[00:01:44] Benedetto Biondi: Cyberpunks that would believe that in a nice, naive way, I would say, that everything will be onchain, decentralized, permissionless. I think we grew up all together over it, and we can see right now that DeFi is adapting to TradFi. TradFi is adapting to onchain finance, I would say, rather than pure DeFi.

[00:02:08] Benedetto Biondi: the two worlds-- I always thought that they are gonna merge. I wasn't sure how, right? So, at this point in time, seeing what is happening with the latest news we can see that traditional finance, the big players, they like blockchain as a technology. They use it, but they still right now wanna use it with their own standard, and it's understandable. They want privacy.

[00:02:34] Benedetto Biondi: The big question is more how regulations are going to evolve because then the players, I guess, will follow.

[00:02:41] Benedetto Biondi: I think that if DeFi players, we are a little bit more wild in the sense to, to build things new. A traditional financial institution, they don't want to upset a regulator or step over the line.

[00:02:58] Benedetto Biondi: It's beautiful to see how it evolves. It's beautiful to see some merging, even if it's limited. But it's good that it's happening

[00:03:07] Pete Townsend:  You've said it quite well is that you've got DeFi, and then you've got onchain finance, which is traditional finance on blockchain rails.

[00:03:15] Pete Townsend: They're two different things in that while onchain finance is moving very fast it was where does the pure DeFi crowd end up with this?

[00:03:24] Pete Townsend: Do they need to adapt, or will DeFi follow its own path and continue to evolve?

[00:03:33] Benedetto Biondi: It's a very beautiful question, and even myself, if I would look in few cycles ago I would say traditional finance will need to adapt to DeFi. Everything will run on DeFi. But if we look at DeFi as the pure decentralized, permissionless, where there is no one being looked into who he is, w-what he did with the money before interacting with the protocol, I think that rarely exist anymore.

[00:04:04] Benedetto Biondi: I think that the average crowd in DeFi, it's not so maximalist that doesn't want TradFi to join in. I think as ecosystem grow up, we all want this to happen with all the pro and cons that this brings.

[00:04:20] Benedetto Biondi: I do believe that traditional finance is not gonna purely run DeFi. I think that DeFi will be an infrastructure that will always exist, and maybe traditional finance will interact with it because there will be liquidity, will be a layer. I, I honestly started to think, for example, about this.

[00:04:40] Benedetto Biondi: Is it possible that in traditional finance you totally extinguish money laundering? I mean, they try their best, but there will be someone who is going underneath it, right? You cannot pretend everything is perfect. So I'm learning now, the more I grow and the more also I learn about traditional finance, that it's about doing your best effort to avoid it, but it's best effort.

[00:05:06] Benedetto Biondi: It cannot be perfect. So in the end, I think will happen similar that traditional finance will interact with DeFi. Maybe will not run on DeFi, and will do best effort to integrate with it by their limits and the limits of of regulators. So I think that's where we will be going.

[00:05:26] Pete Townsend: Yeah. Yeah, I see that. I see where you're going with that.

[00:05:29] Pete Townsend: The two things that came to mind this week when I saw these two news stories, Ben, was that first off, nearly half the companies on the OKX ICE tokenized stock list opted out even with the permissioned pools and the New York Stock Exchange's parent behind it, which is ICE.

[00:05:49] Pete Townsend: It was an option they always had when they were asked to be included in this OKX ICE tokenized stock venue and they, half of them decided to opt out. On the other side, yesterday, DTCC went live on Canton, and JPMorgan has signed up, but JPMorgan opted out of the OKX ICE tokenized stock venue.

[00:06:11] Pete Townsend: Same bank, same week. Yes to DTCC, but they said no to tokenized versions of their equity entering DeFi effectively via platforms like Uniswap, for example.

[00:06:22] Pete Townsend: Do you think that TradFi wants DeFi or just the rails and, or are we just still early on this?

[00:06:31] Benedetto Biondi: I think that there is a part of TradFi that wants the the distribution network of DeFi, but they cannot access it because let's be honest, right? Like once you put something on Uniswap and it's permissionlessly tradable, you may have a, I don't know, a terrorist that is going to buy it, right? Like and later you can sell it, so you are financing terrorists.

[00:06:57] Benedetto Biondi: I don't know how much they want this. Obviously, again, as DeFi builders, we also do our best to avoid this, right? But I think it's very sensitive topic when you are asking big companies if you want their stocks to be tokenized and accessible to everyone, right?

[00:07:12] Benedetto Biondi: So that's understandable. And nevertheless I think they do want the the benefit of it like the twenty-four-seven trading or the worldwide access in a easier way, the liquidity that could be unlocked, right? Because at this point it's still small liquidity. And probably will happen at some point in a certain way.

[00:07:35] Benedetto Biondi: On the other side, what we are seeing with those news of, big financial institutions starting to use Canton this is, very limited.

[00:07:43] Benedetto Biondi: It's very different than being on a Uniswap DeFi part. This is using decentralized infrastructure as a layer for doing certain operation which are compliant with their standard. Okay. It's very good. It's it's nothing bad but it's not using DeFi

[00:08:02] Pete Townsend: Yeah. Yeah. At the end of the day, it does come down to what are the benefits from a TradFi perspective, will this help me to sell more? Can I take advantage of these global formation of capital options that exist when I'm able to distribute this onchain.

[00:08:15] Pete Townsend: And now we've got these three lanes that have emerged that you and I have been talking about here, these DTCC style institutional rails or onchain finance, DeFi protocols that are building RWA products that we're seeing out there of tokenized stocks, for example, being available on a lot of different types of DeFi platforms.

[00:08:36] Pete Townsend: And then the crypto exchanges or early centralized players like Securitize saying, "Hey, use our rails." Where does Folks Finance sit when TradFi is basically picking its rails?

[00:08:49] Benedetto Biondi: Yes. So in the last five years almost that we are on mainnet. We were always very attracted by RWAs. In fact, we were the first lending protocol listing tokenized gold and silver at that time as a collateral. However like we had a lot of conversation with most of the, the player in in the industry.

[00:09:13] Benedetto Biondi: As a lending protocol, we also don't wanna directly list things that are considered securities.

[00:09:20] Benedetto Biondi: It is decentralized , right? Like you, you shouldn't be managing those things. There is a listing process, so, it's not like Uniswap that you can launch the pool.

[00:09:30] Benedetto Biondi: It's different. There is a a listing DD that is being done. Therefore listing a securities means that you have taken a certain responsibility to do that. And of course, theoretically, you can't. And now I think we are seeing more and more of this happening. The regulation is kind of friendly for now.

[00:09:51] Benedetto Biondi: You don't know where we will be in a few years. Let's see also with those kind of complaints that we are seeing by the companies that are are seeing their stocks going onchain even without them approving it.

[00:10:05] Benedetto Biondi: We will see the results. But said that in-- we really like it because we believe that RWAs are a very valuable collateral And compared to, to crypto, which is very volatile, some of those are very stable over time.

[00:10:21] Benedetto Biondi: So there are solutions and finally we are developing and launching now Folks Markets, which is way more flexible in this type of listing.

[00:10:30] Benedetto Biondi: We are using an infrastructure provider for the pool that allow us to have high level of  customization of the pools and so we can launch new assets in a safer way.

[00:10:42] Pete Townsend: And you recently were talking about some of this in that, when you announced the regulated app,

[00:10:50] Benedetto Biondi: a new product we are launching. It's called Wield.money. We're just waiting the Apple Store approval, and it's a one stop shop for accessing digital assets.

[00:11:02] Benedetto Biondi: So it's a VASP licensed, and it offers custody, so we are able to abstract all the technology and basically it's a simple way to enter digital assets, whether it's crypto or tokenized stocks, tokenized funds. We have different ways of allowing you to manage your portfolio. So you can lend on Folks, you can, buy an RWA that gives you a certain yield over time.

[00:11:33] Benedetto Biondi: And we have our debit card, and it's also going to connect to to lending. So you're going to be able to borrow against

[00:11:43] Benedetto Biondi: your assets, RWAs or crypto, and be able to top up the card. So you no need to sell your investments in order to be able to spend.

[00:11:52] Benedetto Biondi: As a DeFi builder, I felt that if you really want safety for your users and also for you as a builder bring certain tools that are easy to use and also secure in a way you are better to comply also with the regulation

[00:12:10] Pete Townsend: And is that, practical openness, is that kind of the, the whole spirit of this?

[00:12:17] Benedetto Biondi: Yeah. I mean, as soon as you comply with the countries we can serve, we have different partners and they are a bit everyone needs to respect their own license. We integrate different tools. We do want to be open because I think that the beauty of DeFi is also the fact that you have $10 of portfolio and you have $10 million of portfolio, you still look the same in front of the protocols or what you are using.

[00:12:45] Benedetto Biondi: So I see this as the big value and I see how is relationship, for example, with banks and when you are a small users, you receive a certain treatment. When you are a big users, you have the red carpet and everything you need. I think DeFi fix this, and that's the very important part as well.

[00:13:05] Pete Townsend: Yeah. Yeah. It's giving people the same access, like you said. I love that, that, the $10 portfolio having access to the same tools and the same securities and the same investment opportunities than those that have $100 million to invest. I think it's a great way to look at it. Ben, what's the best place for people to go to learn more about Folks Finance and everything you're doing?

[00:13:27] Benedetto Biondi: You can follow me on LinkedIn if you like. It's Benedetto Biondi or X is benedettobio and Folks pages is folks.finance is our website, and you can find everything there. Or again, our main social is X folksfinance and LinkedIn Folks Finance again.

[00:13:47] Pete Townsend: Thanks so much for joining the show. It was awesome to riff on these things with you

[00:13:51] Benedetto Biondi: My pleasure. Thank you so much

[00:13:53] Pete Townsend: And to all you out there, thanks for watching and listening, and don't forget to follow or subscribe wherever you get your podcasts. If you're enjoying the show, leave us a review while you're there. It helps others to find the show, and it means a heck of a lot to me. Till next time. See ya.

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