A few days ago, The Cryptonomist had the chance to interview Paolo Ardoino, CTO of Bitfinex, to talk about LEO, DeversiFi and other interesting topics.
Starting with UNUS SED LEO, the latest project you’ve launched, why according to you, from September its price is very close to the value of 1 dollar? It’s not a stablecoin, so why do you think it is very stable?
LEO was issued in mid-2019. We issued it in May and the face value of LEO was 1 dollar, so we sold LEO to investors at exactly that price. No one had the discount, everyone traded the same amount for every LEO. LEO is a young project, it’s not reasonable for a person investing in it to sell below 1 dollar, also because the majority of the people that bought LEO know that this is a long-term project.
It is our native token, so they probably think that there’s no reason to be in a hurry to sell it for a lower price now since Bitfinex has a lot of things to do and a lot to prove to the market.
We just launched our privacy platform under iFinex Financial Technologies, we keep improving our platforms, we keep adding new functionalities. We launched EOSfinex finally and we also just started our affiliate program.
So, of course, in the last few months, the market has not been great in general for the crypto industry, so with the decline of the price of bitcoin, the altcoins are declining even further. We are pretty happy that LEO still holds its initial value and we really don’t expect investors to drop it below 1 dollar, maybe it will go to 0.97-0.95 but that is what we expect, it wouldn’t make sense otherwise, of course everyone is free to sell it at any price, I’m just thinking that if I were an investor, I would not sell it below the price I bought it.
You mentioned DeversiFi, what do you think about this project to be fully decentralised, because I know you decided not to participate in this project directly because you don’t believe in decentralisation, can you explain that?
No, we truly believe in decentralisation. Our entire team is decentralised, all the projects we are working on are moving towards decentralisation or distribution. We are working on Dazaar, for example, that is a project that allows users to create a decentralised peer-to-peer network for data streams and general file-sharing that will see micropayments in cryptocurrencies, that is a great example of our dedication to the decentralised world and the peer-to-peer industry.
The same thing applies to Grenache, that is a DHT-based microservices system allowing people to build complex systems in a completely distributed way, so all our efforts are to scale Bitfinex in a decentralised way as a team and as a technology. DeversiFi is a spin-off of Ethfinex and the reason that happened is that there is an interest from DeversiFi and the group of people that are leading it to rightfully test what we developed internally with Ethfinex in a more free way, in the sense that they want to have freedom to approach to a different set of customers other than the one that Bitfinex is currently targeting.
Also, DeversiFi is more focused on Ethereum while Bitfinex tries to be more blockchain-agnostic so that’s the reason behind the spin-off. We like both the companies, we love decentralisation but we just have two different approaches.
Of course Bitfinex is very famous for its stablecoin Tether, what do you think about the other projects, for example DAI, do you think it will compete with Tether?
DAI is a great idea. It competes with Tether and I think that it is one of the most interesting and innovative projects that have been built so far in the stablecoin market. I cannot exclude that, as Tether, we will probably start working on something similar, although we still see some issues and inefficiencies with DAI and its overall growth.
For example, it’s really hard with the current liquidity in the crypto space that a project like DAI can reach 2-3 billion worth of value in an organic way as Tether USDt did. Also, the fact that it is mainly on a single blockchain might be a limitation, so I would say that what I foresee in the future is a cross-chain stablecoin that can be still algorithmic-based as DAI, that is of course in our interest, we are looking into it and we would like to propose a solution in the near future.
Interoperability between blockchains, do you think it’s possible? Or is it just a dream? Between which one it is possible for you?
When it comes to interoperability, I think it is definitely possible, there are different projects that are working on it, there are blockchains that create gateways to connect automatically Bitcoin, Ethereum, EOS, whatever.
So, you can create all these bridges to move assets from one chain to another, I think that the best use case this moment for interoperability are stablecoins, so Tether is showing that there is a really big value in having Tether issued on Omni, which is backed by bitcoin, Liquid, same backed by bitcoin, EOS, Ethereum, TRON, so we are showing that this is one of the reasons why the demand of Tether is always increasing, our competitors didn’t even start to look at other blockchains, so our main and biggest competitors are still fixed on one single blockchain, and I think that they will eventually be forced to adopt the mechanism we are using.
Of course it will be great to have a more automated way to do these cross-chain swaps but that is part of the user experience and it will improve over time. We are in discussion with several projects to try to reach a point where we can have Tether being easily swapped on different chains. But definitely the ability to move stablecoins on multiple blockchains increases the value of the stablecoin and I believe it is one of the most important features if you want to provide a product that is truly meant to be at the backbone for DeFi.
Do you think you have lost some market share in the recent period, because of the lawsuit etc…?
I can wear two hats in this moment, so with my Tether hat I can say no, if you see from April 2018 we added more than 1 billion, I think 1.3 billion dollars of Tether, that I believe is more than the sum of all the other stablecoins available on the market, and after the last class action, in the following week, in seven days, we added 81 million dollars, so that is pretty interesting.
So it seems like people that know Tether and that know there’s no person behind Tether, understand that the class action is all about trying to undermine the trust that the users have in our product. But really, the amount of interest is just increasing rather than decreasing.
When wearing by Bitfinex hat I can say that of course now all the volumes across all the exchanges are down, we proved that we were able to raise 1 billion dollars with UNUS SED LEO so that also showed that people trust Bitfinex more than anything else, volumes are not great, we have a full strategy to deliver new products, to deliver products that will onboard retail and institutions. So, as Bitfinex keeps on offering a platform that has a dedicated data centre, institutions and professionals can get collocated to get the best performance in executing trades, and at the same time, we are working hard on the retail side that we left a bit behind in the past year.
The first step is the affiliate program that we just launched yesterday, that is in my opinion the best affiliate program you can ever find, because it’s multilevel, it has a dashboard, you can control it every second, you can see how much you’re earning and it’s just the starting point of our new community project that will see both traders and developers and retail/institutional customers be on a single platform, with different tools, being able to interact with each other, and I think that it will be a success for Bitfinex and all our ecosystem.
How is it going with the lawsuit, any news about the case?
Two weeks ago we had a good result, we had a judge agree to our request and our appeal to not have to turn over additional documents to the Attorney General Office. This was important for us because we complied in all possible ways. We already produced a lot of documentation.
What do you think about bitcoin and its function, do you think it will ever reach mass adoption in terms of being a method of payment?
Bitcoin is the most beautiful project I’ve ever seen, it’s how a payment system should be, so there are no other words to describe it, it’s beautiful, it’s well designed and I think it’s a great store of value and probably I see Lightning network as the gateway for micropayments and payments in general, it’s faster, it’s made for that exact purpose of building a payment system, so Bitcoin plus Lightning Network is exactly what you should use for store of value on one side and payment system on the other…
