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The Future of DeFi (Decentralised Finance), with Bobby Ong, co-founder and COO at CoinGecko

Episode Summary

Bobby explains how blockchain technology developments are accelerating DeFi’s possibilities.

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Episode Transcript

Philipp: Welcome to another episode of In Your Best Interest, your personal finance podcast. I'm your host Philipp Muedder, and today we will be chatting with Bobby Ong. Bobby Ong is the co-founder of CoinGecko. CoinGecko was established in April 2014, and it's the largest independent crypto asset data aggregator in the world. Bobby is also a contributing author in two digital currency books - Handbook of Digital Currency, First Edition, and Handbook of Blockchain Digital Finance and Inclusion Volume 1.  He was included in the Forbes 2019, 30 under 30 Asia list, and graduated with a Bachelor of Science in Economics from the University College of London in 2012. Bobby, welcome to the show.

Bobby: Thank you very much. Very glad to be on the show.

Philipp: Yes, it's very good to have you. We have only been talking about crypto, not too much, actually last year, I think it was just right after COVID that we had someone from crypto.com on the show. So we were talking a little bit about their business model, and kind of like in general about cryptocurrencies. But obviously, since COVID throughout 2020, early 2021, hitting all-time highs in Bitcoin and Ethereum. 

I think that, and the whole DeFi space completely erupts onto the scene, even for the more general public, right? Is it a big thing over [02:00] the last 18 months, you would say? So we're very happy to have you here; we are a personal finance and investment podcast. So it's something that our listeners are very interested in, right? 

So I have a thousand questions for you but before we get started. I would like to get a little bit more background on yourself, and kind of like how does someone come up with doing a crypto startup? And is it something you were planning for a long time? And is that something you were interested in college? Or what did you do before even, right? 

Bobby: So I was studying economics in University College of London from 2009 to 2012. I didn't care about Bitcoin at all in college. 

But what happened was - I was in my final year of Uni; I was teaching myself how to code. So what ended up happening was I spent a lot of time in programmer's forums, and one of the forums that I kind of spent some time on was Hacker News, which is kind of like a Reddit for techies? And it was used a lot by a lot of Silicon Valley techies to kind of post interesting news. 

And one of the news that I kind of stumbled upon as I graduated in 2013 was a lot of news and talks about Bitcoin. And I was really curious as to why people in Silicon Valley were talking about Bitcoin, which they claim to be a new form of money. 

And I had just graduated after 3 years in London, supposedly one of the best universities in the world, learning everything that I have to know about money. That's when I thought that OK, there's only two options. 

My lecturers were either obsolete, and they didn't know about Bitcoin back then. Or all these guys were crazy talking about this new form of magic internet money. [04:00] I read the Bitcoin white paper just because I was kind of fresh out of university, so I'm kind of used to reading white papers and all. And I thought that, you know what, maybe this thing could work, what's the harm? Let me just try it out. 

So I bought my first Bitcoin in 2013 through a very sketchy way of buying from local Bitcoins. There wasn't an exchange, so basically, it's like an Airbnb or an eBay for where you match buyers and sellers of Bitcoin. And there's some guy, some random dudes say OK, I've got some Bitcoin to sell, so here's my bank account, send me the money here. So I just send my money to some random stranger on the internet.

Philipp: And you actually got it, that's good.

Bobby: Yes, I got it. So the money went to the escrow, and I got a Bitcoin. So eventually, as I spent more time in crypto, I realised this is actually quite game-changing because you kind of remove all the middlemen away from you; you remove all the trusted centralised entities from the ecosystem. 

And this could kind of remake finance from what it was previously. As I spent more time, I realised that there were a lot of opportunities and things to build in the space, a lot of our websites back in 2014 were really badly designed. So we thought that building a crypto data website that is well designed could be something that is valuable, and useful and that's kind of what we did with CoinGecko.

Philipp: Yes, super interesting. Especially back then, it was still in its infancy, right? Like I remember even me dabbling in it just to open an account, even literally if let's think about this 3 to 4 years ago was already painful still, right? The “know your customer” (KYC), taking a picture, never worked - nothing approved. It was really painful, right? To just hold them, or even purchase any Bitcoins at that time.

Bobby: Yes.

Philipp: Yes. So very early on, so that was interesting how you got your first Bitcoin. So that's very early on. So you started CoinGecko. Can you explain a little bit what CoinGecko does to the audience? [06:00]

Bobby: Yes, absolutely. So CoinGecko, in short, is a cryptocurrency data aggregator; we track over 8,000 cryptocurrencies. So besides Bitcoin, there is Ethereum, Litecoin and 8,000 other tokens in the market. The easiest way to think about CoinGecko is kind of like Yahoo! Finance, but for cryptocurrency. So instead of tracking your stock prices, you track crypto prices on CoinGecko. We foresee a future where anything that can be tokenised will be tokenised. So we are building the infrastructure to track a future where there will be millions of tokens traded in the world.

Philipp: Yes. And I do want to get into this whole token thing, because like you said, there are millions of them, and so how do we make sense of them. Because we are an investment and personal finance podcast, so how do people get access to it? But before we do that, though, right? Where do you see them? There's so much going on, right? We're hitting all-time highs in Bitcoin earlier this year, Ethereum is doing great things. There's a lot of excitement around it. There's a lot of changes ahead. But yes, where do you see the current trend of crypto going over the next, let's say, 12 months, but then also next 5 years, right? If you look a little bit more long term.

Bobby: It's a bit hard for me to predict what's going to happen in the next 12 months because crypto has sort of historically been kind of; it's a very cyclical industry. And the cycle kind of takes roughly 4 years to complete. 

This means it goes through a very high bull run; it goes 1 year of bull run and 3 years of a bear cycle. It kind of roughly mimics the Bitcoin halving block reward halving cycle, which happens every 4 years. But I don't know what's going to happen in the next 12 months because we kind of had a pretty exuberant year this year. 

But I can kind of quite safely say what's going to happen in the next 5 years. Crypto's taking over the world of finance, [08:00] and more and more people will learn about Blockchain technology. And it will kind of do a lot. Finance hasn't really innovated for many years. 

A lot of the core banking infrastructure was still the mainframe computers from the 70s and so on. And it's really hard to kind of innovate; pretty much the whole internet innovation cycle that we have seen has kind of taken place in every industry except the finance industry, finance and banking industry. 

So the Blockchain cycle this time around has sort of allowed permissionless innovation to take place. Where people globally can kind of launch an application, just like how you launch a website or mobile app. 

And kind of have all kinds of interesting innovations taking place. Before Blockchain technology, it was kind of almost very hard or impossible to kind of get anything done because you had to ask permission from so many parties to get anything done. And so I would say that in the next 5 years that a lot of things will be moving from crypto to Blockchain technology. And this market will be a lot bigger than what it is now. 

I've been using this quote from 2013 when I was telling all my friends about Bitcoin and crypto back then; the technology, the genie is out of the bottle. Blockchain technology has been created; you can't put the genie back into the bottle. This technology isn't going anywhere; it's just going to get more and more commonplace in the world.

Philipp: Yes, absolutely. And I do want to get right next into the DeFi space, right? You mentioned the financial space is going to get disrupted here by blockchain technology, right? 

Just to go back one more step, though, you did read the Bitcoin white paper, and you started early on. Where do you see Bitcoin as kind of like the, it's still the largest by market-cap cryptocurrencies also compared to some of the other DeFi projects, and some of the coins, right? It's a limited supply. Do you still see this as becoming still the digital gold then [10:00] or staying that way? Or where do you see Bitcoin if we just talk about that one?

Bobby: Yes. So I think Bitcoin is interesting in the sense that it hasn't innovated, and that became its feature. The most interesting part is it has a fixed supply of 21 million units, 21 million Bitcoins. It has taken on a store-of-value narrative, and we've always thought about this even from 2013 and so on. 

And you can see why this store-of-value narrative takes place and becomes increasingly more important as we go along. It's mainly because of the amount of money that is being printed by the Federal Reserve and the central banks, other central banks worldwide. 

I don't know how this can be sustainable, so if you want to protect your money against inflation - Bitcoins, because of its limited supply, is one good way to protect it. I always like to compare Bitcoin as a form of digital Gold, and during times of inflation, during times of inflation, high inflation, things like Gold and Bitcoin, which is a digital version of it, would do pretty well. I would say to hold the value of your money.

Philipp: That's great. Thank you for explaining Bitcoin to us, right? The next step is that you mentioned earlier that the financial sector will be kind of disrupted by Blockchain technology, right? And obviously, the buzzword of the year is DeFi, right? Or decentralised finance. 

Can you explain a little bit to the audience what actually DeFi is, right? We talk about it a lot, or you hear a lot in the news now everywhere, even the mainstream media. But what is it actually, in your opinion?

Bobby: Yes, sure. DeFi stands for decentralised finance, which is basically a movement to provide financial services in a decentralised manner. So you can think of all your financial services that you have. Like you put your money in the bank, and you kind of borrow money from your bank and every other financial service. 

All those things are done in a centralised manner, which requires a [12:00] centralised party and requires you to trust a party, a centralised party like a bank or custodian and so on to make these things work. DeFi is mostly built on top of blockchain networks, blockchain platforms like Ethereum, which allows for smart contracts, which are basically smart codes, smart applications that are deployed onto computers globally. 

And with that, it can kind of run autonomously without the need for anybody to trust any centralised party and without the need for any human intervention. So kind of like if you imagine going to a pawn shop, and you would like to borrow some money. Like you would, say you have a gold chain - you're short of cash. So let's say you're short of cash, you have to get a piece of gold chain, and you would like to borrow like $1,000 from it. 

The first step is you have to walk to the shop, and then you have to get this piece of gold appraised by the appraiser, and then based on the amount of it that he probably said, OK, this is worth $1,000, but I'm just going to give you $500 for you to borrow. 

DeFi allows for things like this where you have assets like Bitcoin or Ethereum or any other tokens that you have, where you can kind of deposit it to a smart contract, and automatically allow, the contract allows you to borrow like for example, 70% of the value of those tokens for you to spend however way that you wish you would like to. 

A lot of these things, these services were available to private banking clients, I would say. High net worth individuals, where the rich can borrow based on the assets, their shares that they have, the equity that they have. But it's not available to the normal retail individuals. Crypto allows you to make your assets productive and kind of draw out some value from it to use for other use cases, for example. [14:00]

Philipp: Yes, that's an interesting point actually, because I think that's the next evolution there, right? Because let's say I have a certain amount of Bitcoin, and I have some Ethereum and some other coins, right? And they're just laying around. Yes, obviously, I look at the appreciation of the asset, right? 

But where do you see the whole staking coming in, and because of my bank account, well, I used to get interest, not anymore, right? But we used to get interest in it; you just said I can borrow against it. I think there's a lot of platforms starting to adopt that and starting to give you interest on your coin holdings, right? In general. There is, however, the discussion between should you keep it at these platforms? 

Can they be hacked, right? Or are they attacks? Because like, there are the hardcore people who say everything should be on a cold wallet, right? Somewhere stored. Not leaving on exchange or at one of these platforms. Where do you stand there or where do you see kind of like this, because there's no regulation, right? So it's difficult for people to trust other people to do that, yes, at this point right now, right?

Bobby: Yes. So it's interesting that you brought that up because there are lending and borrowing platforms out there in DeFi. Such examples would be Compound, Aave, and C.R.E.A.M. , for example. There's a lot of risks when it comes to putting your money on a smart contract, so instead of trusting a bank account which is regulated by central banks, that bank can be subjected to a bank run.

You trust a smart contract that has been audited and time tested, better tested. And because it's open, everybody can see the smart contract, and it's constantly being attacked because whoever can hack into it stands to gain like the entire amount in the smart contract. So because nobody can take the money in there, and anybody is free to attack, it's most likely safe. So there are a lot of risks when it comes to putting your money onto this platform. [16:00] Smart contract risk is one of the risks, but there are ways that you can mitigate them; you can buy insurance on this smart contract. 

So that if there is a hacking incident on one of the smart contracts, and if you lose some money, there will be a payoff from payout from that insurance, from the cover. So, for example, I think there's a lot of people looking to crypto DeFi these days because using your bank accounts yields zero these days. Euro is kind of good compared to getting a negative interest rate, so you have to pay your bank to put money in the bank account, which is kind of worse.

Philipp: Which we have in Europe already, right?

Bobby: Yes. I think when we look into crypto, like for a lot of these USD stable coins deposits, at this current rate you can probably get around 10% to 12% per annum in interest, which is kind of 30% last year, but yields have kind of gone down. 

And you can kind of buy insurance on somebody's deposits for about 2.5% per annum, 2.6%. So you're looking at net interest after insurance at around 8% or so. Which is still reasonably high for a USD Stablecoin deposit compared to bank accounts. 

But yes, I would say that there is a lot of risk; you need to know what you're doing. Essentially, you are becoming your own bank, you are trusting yourself, and when you become your own bank, you take care of your own security. There is no one to blame except yourself if you screw up. 

So when it comes to security, it is highly important to pay a lot of attention to how you secure, keep all your accounts safe from hackers. Because if you lose them, then that's it, there's no one. Because crypto transactions are irreversible like if you lose your coins, that's it, that's the end of it, there's no one for you to complain, there's no one to launch a report to.

Philipp: Yes, that's always the hard part. Like if you send crypto to a friend or something, or it's an address, and you check it 50,000 times, right? [18:00] Before like, because when you press that button, and there's one wrong letter or something, it's gone, right? 

Whereas the bank, you can go to the bank say, hey, can you reverse a transaction or something, right? It's still a pain to do. But yes, I know it’s definitely one of the things that people should look out for. So we understand what DeFi is and kind of how it works, right? So are there any favourite projects or like interesting projects that you think that you've seen or come across that are worth sharing? Because that's kind of the best use case, kind of applications on the horizon?

Bobby: So my favourite is definitely exchanges, decentralised exchanges. So if you think about it, exchanges have historically been centralised entities. So things like Coinbase, Binance and so on. So you basically send your cryptocurrencies to their wallets, and they hold it on your behalf. And then they provide a platform with an order book and a matching engine, and you can kind of trade BTC, USDT or whatever other currencies that you want. And basically, hope and pray that the platform doesn't go down because if it does go down, then you're screwed because there is no other recourse. 

Well, maybe in some countries, there are regulator exchanges which are regulated by the securities commission, in which case you can kind of launch a report. But there's not much that they can do if they decide to run away; the money is gone anyway. 

So decentralised exchanges are interesting because instead of putting your funds in a centralised exchange, you don't transfer the funds to this third party. You hold the funds yourself, and you only make a transaction when there is a matching amount on the other side for the trade. 

And I think the latest round, the earliest forms of decentralised exchanges, uses an order book-based system. So you have to match a buyer with a seller with the exact amount [20:00] and exact size. Which was a bit hard in the decentralised world, but the newer versions like Uniswap and SushiSwap make use of this thing called automated market maker. Where the matching kind of is done automatically with some sort of a slippage, and that's interesting. 

But what is more interesting is, for the first time, because it's called an automated market maker, you can be a market maker yourself. And instead of the fees going to professional market makers, the fees will go to people who provide liquidity on these centralised exchanges, and you earn a yield for providing your money, your liquidity on these platforms. 

So a lot of financial, like professional market makers on centralised platforms, like they would have to adapt to the decentralised world, and there is no - I mean with a lot of the earlier versions of decentralised action - there is really no added advantage from a professional and a retail market maker. 

But the newer ones on Uniswap version 3, for example, there is some other advantage you have to kind of, there's a little bit more sophistication to doing market making on these platforms. But I think there's interesting yields that you can make from providing liquidity on these decentralised exchanges.

Philipp: Yes, it's a super interesting topic. I need to dive deeper on this topic for sure. But it perfectly makes sense why it's there and what benefits it brings to people, right? So one of the things you talked about a little bit earlier, and you said hey, in Malaysia, some of the exchanges are actually regulated already by the government, but there's still not much you can do. 

We always hear the risk of government regulation, right? So that's always one of the big things that when you talk to people that are not on board with crypto, that's the first thing that goes, oh just wait until we get government regulation, right? At that point, you just get the USD token from the US government, and then everyone [22:00] will adopt that compared to Bitcoin or all the other ones. How do you see that? Or is that already too late? Or actually, do countries have to adapt to that ecospace that was created because they came too late now? Or where do you see this? What's your point of view?

Bobby: Regulation is really fluid, right? I mean like regulators are constantly catching up with the innovations that are taking place in the crypto space. I think we definitely need regulations, especially on the fiat on and off ramp. 

Like the part where it interfaces with your USD or JPY or MYR, those people need the exchange platform, which needs to be regulated for obvious AML, KYC purposes. But once you're in the crypto realm, then I guess it really depends on how regulations will play out. 

Nobody knows how things will play out yet, so it's kind of; I think it's interesting to monitor to see how things go. I think there will be regulatory arbitrage; countries will be competing against each other to kind of attract the talent, the companies to relocate to these jurisdictions to operate. 

But I really hope that regulators will take an open view to regulating the space because there are a lot of opportunities there, and the regulators which take an open view will reap a lot of benefits by attracting the right companies and talent to relocate to these places, to build their companies.

Philipp: Absolutely, great insights there. So going back to the DeFi topic then, right? Obviously, one of the reasons why it's also been so big over the last 18 months, and especially probably the last like, since about October, November, right? It got bigger and bigger and bigger. It's been in the news, right? And also big billionaires, millionaires like Mark Cuban, [24:00] Kevin O'Leary, a host of others, right? Elon Musk, we're going to have a separate question for you on that. But even hedge funds are now getting into DeFi, right? 

And you see a lot of venture capital money. I think one of the ones that fascinated me was obviously the ICP token, right? The internet one, everyone was invested in that basically, right? So what do you think is the main reason why all of these people are now getting interested? Is it just a short term like get-rich-quick kind of thing? Or is it actually they're really believing in this, and they're really seeing the future as it is, as you are seeing it?

Bobby: I think it's a mix of both, right? I mean the high returns that Bitcoin and the other DeFi tokens have exhibited in the past one year. I mean, if you are a fund manager and you are not actively looking into putting a small percentage of your fund into the crypto market, I think you'll be out of job in the next few years. Because your LPs should be asking what you are doing? 

Why are you not investigating the crypto market? Why are you not trying to hitch or maybe have some percentage of portfolio in crypto? So I think every single fund manager is actively looking at allocating a percentage of their funds into Bitcoin at least. And the question is, how can they do that reliably? It's obviously not a very easy thing. There's all this fund mandate and all this custodian services and all. 

But I would say that the high returns offered in the crypto space is a very big pull factor. And also the returns that you can make from all this staking in this DeFi. I mean, if you can make 10% on your USD deposits with insurance, compared to just sitting in, I mean getting 10% in the equity market is a spectacular return for any given year. But if you can just get 10% just by holding USD without any volatility except for the risk, and if you can pass off all the risk completely, then like why are you not trying to do that as a fund manager? [26:00] So that's kind of one of the reasons as well, and yes, that's my answer.

Philipp: Yes, for sure. And like I said, I did want to mention Elon Musk, right? Because I think some people in this space also got upset about it a little bit as well, right? So this is the whole thing, you're openly, and he has such a platform, right? We have to go back a step, actually. His platform on the internet, especially on Twitter, right? And social media is gigantic, and everyone listens to his words, right? There's a lot of people who look up to him as the messiah, right? 

With Tesla and everything, you get the very fanboys of him, right? So one day, he pushes Bitcoin, then he says, oh, Bitcoin is not green enough on the mining side of things and to run Bitcoin. And then you say, oh, Dogecoin is better, right? And then Dogecoin goes through the roof, right? So, where do you stand when it comes to these? Basically, where do you stand when it comes to those arguments from him or like the way he handles these things? And then how bad is it for the everyday person, right? Because they're kind of torn, right?

Bobby: So I mean Elon Musk is just trolling all his followers. And my first advice is you shouldn't be listening to random strangers on the internet on what you should do with your money; you should really be doing your own research and finding out for yourself. 

I mean, just because Elon Musk says that Dogecoin is going to the moon doesn't mean that you should go and spend all your money. Because that's obviously a bad decision. And we have seen like; I think he was shilling Dogecoin when on Saturday Night Live when it was like 70 cents or so, and look where the price is now, like at least half from where it was. 

So I think if you're just buying it just to play along as part of a game, then it's fine. But if you're buying it as a large percentage of your portfolio, just because Elon Musk is saying that you should buy it, that's obviously a bad reason to buy. So you shouldn't be following advice from somebody else.  [28:00] 

My advice usually is that if you are, there's a range of listeners to this podcast; some of you may be more familiar with crypto and DeFi and so on, but many of you may not really be into Bitcoin or crypto. And my advice, and I gave this advice to one of my roommates in the UK is that if you are, the way to think about Bitcoin and the crypto market is to have a super long-term view of the space. Like at least a five-year horizon. Because I have no idea what's going to happen in 12 years, 12 months' time. 

But in 5 years' time, 10 years' time, I'm pretty sure that it will be a pretty big industry. Take a look at your net worth, and have a small percentage - be it 1% or between 1% to 10% -  just choose a number that you're comfortable with - let's say you choose 5% of your net wealth, and buy Bitcoin and maybe Ether, and then it's up to you. 

Just buy one lump sum or dollar cost average over the next two years for example, and then just don't think about it. Ignore all the news, all the hype in the market and just hold for the long term. And then just come and revisit that in 5 years' time and see what you want to do with that portfolio. Because that 1% could be worth a lot more by then, or it may go to zero, in which case it's just a small percentage of your portfolio. 

So that's what I always tell people like there's a lot of hype, a lot of news, there are 8,000 coins. But the key thing is unlike the stock market, the crypto market is still very immature, and almost all the tokens are correlated with Bitcoin. So if Bitcoin goes up, like the rest will also go up maybe at a higher volatility, at a higher rate perhaps or lower rate if it only goes down.

Philipp: Yes. That's good advice for investment strategy for beginners, right? If you want to get in, take a net worth percentage that you feel it's OK to lose, right? It's OK to lose, but at least I think with crypto, it's not a lot for me at least. 

Just to try it out, [30:00] because it's not the normal way, right? In the beginning, it seems very intimidating, right? Compared to like oh, I'm just sending money to my broker and buying an ETF, right? In the first step. Now it's getting much better nowadays, right? But I think that just to dibble in it and understand a little bit more the technology is interesting anyways. And I think the best way to do it is putting some money into that portfolio.

Bobby: Yes. And I would like to add like I mean if you say you put a 1% of your net wealth into Bitcoin, and then there's a lot of things in crypto, and all these things require time and effort, and a little bit of money to learn all these things. 

And if you are interested in all these things, you take a small percentage of that portfolio, 1% or 10% of that portfolio, and then go around and play and learn from these things. Learn to use all these DeFi applications. There are a lot of high-yielding opportunities in the space, but it requires you to spend the time and effort to research them. 

And many times, like learning about them costs money, because you have to pay the network transaction fee, it's not free. And you’ll probably make mistakes, and you’ll probably lose the money once you make a mistake. So I mean, that's just mainly for people who want to spend the effort and time to kind of learn these things. But if you don't want to spend all this time and effort to do it, just buy Bitcoin and maybe Ethereum and just hold for the long haul and see what happens.

Philipp: Yes, I think that's super good advice. Well, then let's move on, you already mentioned a little bit, but would you mind sharing a little bit of what is in your personal portfolio? And if so, is it mostly into crypt or only crypto at this point now? Because you've been so early on in the space, you really believe in the space. Or do you still invest in other asset classes as well? Like real estate, stocks, bonds kind of thing?

Bobby: Yes. So crypto is obviously a part of my portfolio, and I do like some real estate, not really, I mean the own real estate I'm staying in. [32:00] Looking for a couple of investment real estate. Equity market is obviously a big one, I use StashAway, actually, so I'm a client. I do a dollar-cost averaging strategy, so every month when my salary comes in, it automatically deposits into StashAway and buys into the equity market based on my risk portfolio. For me, I look at that as kind of a retirement savings as well. So yes, the equity market is an important part of the portfolio.

Philipp: So a little bit of everything still. And then, within the crypto investments, you already talked about deep diving on certain protocols or certain coins, right? So that you understand them better before investing in them. Do you mainly invest with Bitcoin and Ethereum, so the blue chips? Or do you still diversify across a lot of the smaller altcoins in the space?

Bobby: I would say maybe 80% to 90% is Bitcoin and Ethereum, and then the rest is just the other blue-chip DeFi tokens, for example. And then maybe a smaller percentage on some of the speculative small-cap coins. But those are really risky, right? And then some percentage of those, I mean you can take because you have Bitcoin and Ether, you can always take that and do some farming as well. 

So if, for example, if you strongly believe in Bitcoin and Ether, you can take BTC and ETH and kind of put it into a decentralised exchange like SushiSwap or Uniswap and kind of provide liquidity for this. And everybody who trades WBTC or EVE on the decks will accrue a fee, and this fee goes to you. 

So you are earning money from providing your liquidity on these two tokens that you believe will hold value in the long term. So I mean, there are obviously some risks as well. This is called impermanent laws, and it's a bit more complex to kind of talk about it today. But if you believe in the ratio for the long term, then it should be fine. [34:00]

Philipp: That's awesome, that's really good. I'll have to do some digging on those two things, so that's good. And obviously, another big part of your network is probably CoinGecko as well, right? So, where do you see the future of CoinGecko? What are kind of like the next spaces you guys want to go into? Or what are you already doing that's interesting for the listeners to follow up on?

Bobby: Yes, you brought a good point. Yes, indeed, the shares are worth something. They're worth nothing until they are sold, I suppose.

Philipp: That's what I always say about startups; yes, you're right.

Bobby: Yes. I mean, I always tell my guys options as well; the shares are toilet paper money like they are worth nothing until an exit happens. Even like, I mean it may be worth a lot of money based on whatever amount that you’ve raised from the valuation from the company. But it's just paper money, paper value; there is no real value until you have navigated a successful exit. 

So yes, kind of the end game, I suppose in the next few years is to have a successful exit, because then I can successfully turn the shares into real money, real value, real asset that I can use to retire, I suppose, or do something with the rest of the money I suppose.

Philipp: Yes. And then actually, I didn't research this before, but did you actually have venture capital money in CoinGecko? Or have you been bootstrapping it from the beginning?

Bobby: Yes. So we didn't raise any money from VCs, we actually bootstrapped the company from 2014. Back in the days in 2014 when we started the company, most VCs didn't really understand Bitcoin, especially the VCs in this part of the region in Asia. 

That kind of forced us to kind of be creative with how we allocate capital and how we spend capital to grow. And then because we spent the first few years growing without VCs, and then eventually we kind of generated the cash flow that we reinvested in the business. And we reached a point where we didn't really need external capital to [36:00] grow the business further. So yes, that's the story of how CoinGecko ended up being bootstrapped.

Philipp: That's an awesome story, right? It's good to keep your equity stake high, so no dilution for you, so that's awesome, really cool. Hey Bobby, thank you so much. Is there any, like, final parting thoughts or like advice for people who want to get into the DeFi space other than what we mentioned already that you would want them to take away with?

Bobby: It's probably worth mentioning that it's worth the time to read the Bitcoin white paper and then to play and take a look at Ethereum and these other applications.

It's one thing to read about things or about the potential of blockchain technology or Ethereum or DeFi, but it's a whole completely different experience when you actually go out and use these applications yourself. So go out and use this application instead of just really; you can hear from me on this podcast, but it's completely different if you go out and use Compound, Aave and all these other DeFi applications.

Philipp: Yes, very good advice. And so, if you guys want to learn more, I will put the link to CoinGecko's website. I think there's a lot of resources there as well for people to learn about Bitcoin and crypto space in general. 

So we'll definitely put some links in the show notes below for everyone who wants to learn more and can follow Bobby as well. So again, Bobby, thank you so much for being with us. I think we'll probably have to do a follow-up session in a few months' time to just go even deeper on some of the topics. Because I think there's so much to learn from this, and I think the appetite of the people is through the roof right now. So hopefully, I get to have you again here.

Bobby: Yes, looking forward to it.

Episode notes

In this episode, Bobby Ong shares his thoughts on DeFi, the future of blockchain technology, and how to approach investing into the crypto space.

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Episode Contributors

  • Philipp Muedder (Head of Financial Planning at StashAway)
  • Bobby Ong (Co-founder and COO at CoinGecko)