Arthur Cheong, Vice President of Growth and Strategy, Zilliqa sat down with ValueWalk to talk about stablecoin. The full Q&A can be found below.
I joined Zilliqa full-time in September 2019, having been appointed as Vice President of Growth and Strategy. As Zilliqa enters this next phase in our journey, initially marked by the launch of smart contracts on our network, truly bringing our mainnet to life, it’s crucial that we now focus on the growth of our ecosystem. In my role, I have the opportunity to direct and shape this growth which is tremendously exciting as we begin to see serious traction happening on the ground.
Cemented by our initial foray into the payments space by a partnership with fintech payment solutions provider Xfers, Zilliqa is now looking to a renewed focus on areas of open finance (OpFi) and decentralised finance (DeFi). Such areas of the blockchain industry are ones that I’ve been passionate about for quite some time. As part of my role, I’m also responsible for actively engaging with corporate partners and other blockchain players in the space, building support and inking partnerships with key innovation actors. At Zilliqa, strategy takes a front row seat, and we strive to stay abreast of industry and technological developments in order to keep our finger on the pulse.
In his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 Read More
Prior to my time at Zilliqa, I was already heavily involved in the startup, blockchain, and digital assets management space which placed me in good stead when it came to considering Zilliqa’s merits beyond its technological strengths. In 2018, I also founded Chaintech Ventures to offer professional crypto-assets research and insights to some of the most prominent projects in the industry, including Binance, Liquid, as well as Bithumb. Over time, I’ve been able to cultivate a deep understanding of cryptoeconomics, specifically in the areas of system incentives design and token value capture.
Before my life in blockchain, I was actually in the midst of completing the trader development programme at BP, one of the largest physical traders of oil and gas in the world. During that time, I was working quite closely with traders and charterers to generate additional trading profits for the organisation.
What does Zilliqa aim to do? And how does it tie into stablecoins?
The boilerplate answer is that Zilliqa strives to become an industry-leading blockchain platform, offering enterprise-grade scalability and security to support far-reaching applications and innovative use cases.
But personally, one of the main reasons why I was drawn to the project was because of its spot-on focus on the technology. I cannot overstate how important it is for a project to have the right technological chops before any mainstream adoption can happen! Zilliqa is the first project to be successfully built on sharded architecture and to implement the principle of sharding in action as a scalability solution. This is very impressive given that it offers a balance between the golden trilemma of security, decentralization and scalability which forms the core principles of blockchain. By merit of the project being an open network, there are no limitations to the next generation of financial applications that can be built on top of Zilliqa.
Zilliqa is known as the first public blockchain platform to successfully implement sharding. In your view, what are some of the key drivers that help to propel mainstream adoption––technological progress, community outlook, or otherwise?
As we move forward, more nuanced aspects of mainstream adoption such as user experience (UX) design are also becoming barriers to entry for the average consumer. One instance of this is the high transaction fees that we’ve seen in blockchain games––think back to the time when CryptoKitties famously toppled the Ethereum network at launch. This is where we’re trying to make a difference in building not only a secure, but also seamless, environment for end-to-end users, including both developers and consumers. We pride ourselves on a friendly developer experience and offer a rich variety of tools, resources as well as coding tutorials for interested individuals. Our developer education outreach is aso taking place across university campuses around the world, such as our recently concluded ZILHive Education workshop, now in its second iteration with the renowned Oxford Women in Computer Science Society (OxWoCS).
Zilliqa recently announced that it would be providing the infrastructure for StraitsX, a pilot stablecoin initiative launched by Xfers. What is the consumer looking out for in a crowding market with increasingly diversified financial offerings?
I would say that consumers are currently on the search for more innovative offerings to manage their personal finance and wealth, yet there continues to be very little structural innovation in the space. Most financial services are still heavily dependent on intermediaries, especially in the asset and wealth management space where consumers are hampered by a lack of access, variety, and frankly exorbitant transaction fees.
In such a scenario, stablecoins are critical in offering consumers the luxury of choice, allowing access to a plethora of financial applications that have spun off in different directions, including digital asset exchanges, lending and borrowing platforms, as well as fiat to crypto payment gateways. As the DeFi landscape continues to be punctuated by more sophisticated financial instruments, consumers will be well-positioned to better leverage and maximise their digital asset holdings.
Stablecoins have been a heated topic of discussion in the past year, particularly with the intense debate on Libra stablecoin. What is the significance and bearing of stablecoins in a changing crypto-economy?
At a fundamental level, stablecoins are simply crypto assets that are designed to minimize and counter price volatility. Its value is then calculated relative to an arguably more “stable” form of asset or even a basket of assets, in the case of Libra. I think we can agree that volatility has so far prevented crypto assets from being recognized and utilized as a means of exchange. Without being accepted as a standard unit of account, neither businesses nor consumers can easily introduce digital currencies into their daily way of life when its value can drop or rise dramatically at any single point in time.
Tackling these issues head-on will allow audiences to be more receptive of crypto’s worth, boosting its presence on a much wider stage. While not exhaustive, some examples where stablecoins can rewrite the current value proposition includes; remittance, to cover price movement while payments are processed; businesses and corporations; lending and borrowing markets, to facilitate long-term issuances; and trading and wealth management, to enable denomination of trading pairs in US dollars and exposure to fiat rates along with arbitrage opportunities.
The Monetary Authority of Singapore has very recently expressed its intentions to go forward with the approval of cryptocurrency-based derivatives for trading on regulated platforms. How can companies in the space ride on the wave of regulatory optimism?
Singapore offers one of the best jurisdictions for crypto and blockchain companies to operate. From our experience, regulators espouse an open mind when it comes to the winding path of innovation and the country has also made clear its ambition to become the regional centre for blockchain and cryptocurrencies. So long as companies remain regulatorily compliant and set up proper processes, they will find a welcome home in Singapore.
Perhaps more significantly, the regulatory clarity that Singapore offers now allows for companies in the space to plan for the long-term instead of being interrupted by constant policy changes. There is a comforting assurance that what we have worked so hard to build from the ground-up will not be declared illegal overnight. For crypto and blockchain businesses just starting out and looking to build a sustainable business, Singapore is a good place to be.
In a crypto market famed for its wild volatility more than anything (bar stablecoins), what do you think should be the yardstick of growth?
I can only speak for Zilliqa, but having operated in the blockchain space for over an extended period of 2 years now––which honestly feels more like 10 given the hectic lifespan of industry projects––some helpful considerations would be the number of active community members and users on the platform, as well as the number of active transactions. This gives us deeper insights into the health of the ecosystem, and whether the project as a whole has been successful in reaching out and inviting the right audience onboard our platform.
Looking as well to the quantity and quality of applications that are being built out on top of a platform can also showcase growth in a real world sensibility. Other indicative benchmarks include the total value of transactions that have been processed to date, measured over specific time periods such as within a given day, week, or month.
What are the industries likely to take off in the next phase of the decentralized financial movement?
In my view, the next sector that is likely to take flight will be borrowing and lending. There is a massive demand for yield generating assets in the current low interest rate macro environment we are seeing. By disintermediating the middle man through the clever use of smart contracts, higher returns are being reimagined for lenders and this has been a massive game changer evidenced by the growth of total loans originating from various DeFi platforms.
The spotlight is also going to be trained on the wealth management space. With the growing variety of financial instruments, users are at liberty to assemble and build different financial portfolios without bearing the cost from legacy architectures and outdated technological systems. Historically, financial products that might only be available to high net-worth individuals can also be offered to retail consumers, bridged by the increasing diversity and vibrancy of innovations happening in the DeFi space.
What do you think will be the headline act across the wider financial landscape in 2020?
The wave of disruption brought about by DeFi will be focused chiefly on two pivotal points: the first being the area of cross-border payments and remittance, and the second referring to the tokenization of assets to unlock greater liquidity. It’s important to remember that DeFi represents a new phase for the financial landscape because of its character traits of transparency, openness, and financial inclusivity.
The core innovation of DeFi is that the “trust layer” is now determined by the software and code itself. Without the time and cost associated with a high level of intermediation, the promise of DeFi is wide—broader access to financial products, programmable money, real-time risk transfer, and auditability of financial contracts—ultimately, anyone with a mobile device and an internet connection can be introduced into the wider thread of financial progress happening today.
About Arthur Cheong
Arthur is the Vice President of Growth and Strategy at Zilliqa, where he is responsible for managing strategic partnerships and identifying promising opportunities across the blockchain industry specifically in areas of decentralized finance. Previously, Arthur worked as a Crypto Trading Strategist at JST Capital, an institutional digital asset trading firm. In 2018, Arthur also founded Chaintech Ventures, a private cryptoassets research firm that has provided market insights to leading industry organisations including top crypto exchanges. Prior to his entry into the blockchain space, Arthur was in the Trader Development Programme of BP, one of the world’s largest physical traders of oil and gas, rotating across the shipping, analytics, and trading functions of the organisation. Arthur obtained his Bachelor’s Degree with Honours in Economics and Entrepreneurship from Nanyang Technological University.
Zilliqa is a high-performance, high-security blockchain platform that aims to make decentralised blockchains the building block of future enterprises and applications. For more information, visit: zilliqa.com.