The contagion from FTX\’s collapse underscores the appeal of keeping funds in your own custody, says crypto executive Stephen Young.
After years of designing software for banks, Young helped found Coindirect, a peer-to-peer cryptocurrency exchange, in 2017. He left three years later to start NFTfi, a decentralized lending platform.
Young\’s pivot was prompted, he says, by a basic insight: the power of not being dependent on a central authority to handle your money. The way Young sees it, DeFi is appealing because it allows for more innovation vs. the regulated institutions. One indication of that: NFTfi, which matches lenders with borrowers by using NFTs as collateral, has seen its lending volume grow from $300,000 in 2020 to more than $250 million so far this year.
Young spoke with Crypto DeFined on Nov. 17 about the collateral damage of FTX\’s implosion. He also provided insight on why he\’s still bullish on NFTs, despite the crypto winter.
Five takeaways from Young’s interview (edited for clarity):
Vague U.S. rules = vague management in the crypto world. The FTX collapse \”is the kind of thing that happens when you’ve got vague or unclear regulations.\” People who play by the rules that govern the regulated world, he notes, \”couldn’t offer some of these products.\”
Investors are partly to blame for the FTX collapse: Investors kept funneling money to FTX, and yet, the company was basically a mess inside, he points out. \”Where was their due diligence? They’ve also got some responsibility” for the collapse.
Ripple effect on crypto start-ups: \”During the peak of the bull run, anonymous teams would raise money based on a Discord and early sales of an NFT. Everyone was just throwing money at projects,” Young says.
Post-FTX and during the bear market, that\’s no longer the case. Predicts Young: FTX’s collapse is going to “trickle down into the start-up world” and make it even harder for projects to get funded.
NFTs are still the future. “At some point, the NFT market cap will exceed the crypto currency fungible token market cap…NFTs are to web3 as web pages are to web2. They’re kind of the basic building blocks on which this new economy is being built.\”
Young also points out: Despite the crypto winter, \”all the top collectors are still buying, and they’re still trading with one another.”
Self-custody = power. At NFTfi, he points out, “we don’t have access to anybody’s funds. It’s all mediated via a smart contract. We can’t reach into any of those loans. Those entities are never recoverable by us under any circumstances. That’s the real power of self custody and decentralized finance.”
Watch the replay here.