AMA Highlights — YIELD
By Daniel Dal Bello, Director.
November 30, 2020–10 min read.
On Thursday 26 November, we welcomed Tim Frost, Jan Strandberg, and Justin Wright from YIELD into the Hillrise Capital Telegram chat for an AMA. Tim is the CEO, Jan the Marketing Lead, and Justin both COO and CFO.
Decentralized finance has been moving forward at a tremendous pace in the second half of 2020 — yields have been farmed and many rugs have been pulled. YIELD are working to further democratize DeFi through their mobile and web apps, insured wallets, debit cards, fiat gateway and more.
YIELD is aiming to reduce the complexity of DeFi and focus on user experience — one of the key friction points to broader adoption.
In this post, we have compiled key questions and answers from the event.
Daniel Dal Bello
Hi guys and welcome, always nice to have three guests for an AMA — it’s been a while since the last one. Let’s start with some introductions to yourselves and perhaps Tim, you could give a further introduction to YIELD?
Hi team, with all the recent fame, hype, hacks and turmoil in the yield farming space and DeFi I’m very curious to learn more on what you’re doing to stand out from the crowd. Thank you for joining us here today!
My name is Tim Frost and I am CEO of YIELD. I have a rich Fintech, marketing, business development, and operations background. YIELD.app is my 3rd digital bank and I have been a key figure with many successful Fintech and blockchain companies — specializing in early-stage growth, operations, and development.
I was part of the founding Wirex team and supported operations, business development, and marketing for the first 18 months. I also joined and helped take EQIBank to market — a global digital challenger bank with an average client AUM of $250,000. I have helped accelerate early-stage blockchain startups QTUM, NEO, Paxful, Polymath, Selfkey, Everex, and many others.
YIELD is a licensed and regulated Fintech company that enables anyone to invest in decentralized finance with the touch of a button! Thanks to our intuitive app and web platform, users around the world can start earning returns from DeFi products without having to go through a lengthy, complex and often costly learning process. Our users earn up to 20% APY through our DeFi strategies on the backend.
About me — being a growth hacker, digital nomad, and creative thinker, I oversee marketing for YIELD. I’m very data driven and have extensive experience in branding, PR, and SEO. As the Head of Marketing at Paxful, I helped the company scale up from 50k users to more than 4.5M, and from 100k weekly revenue to over 45M. I also have many successful ventures in the gambling industry.
Sure, having spent most of my career in capital markets and fund management before moving over to Fintech, this is my first venture in the crypto space. I have spent the last 6 years building out Beehive P2P, the largest SME P2P lender in the Middle East and having been introduced to DeFi by Tim.
Seeing the potential to really take crypto to the mainstream, I jumped at the chance to be part of the founding team.
Daniel Dal Bello
I just want to start with establishing your positioning and target user base. Your mobile and web app are “designed to offer the same experience as digital banking services”.
What is your go-to-market strategy here?
You said you’ve been inspired by neobank design, so are you wanting to position yourself as some kind of neobank and compete to be the primary banking app for your users?
This is my 3rd digital bank with my first two with tremendous traction. There is no shortcut to success. We have a well balanced team that is building a great front end and a sophisticated backend.
It’s all about building good product, have excellent communication, support, and consistency. Wirex, my first digital bank, has 3.5 million clients, Jan helped bring Paxful to 4.5 million.
We build local communities and provide consistency in service.
Our go-to market strategy is to work with different communities and influencers, and set up long term partnerships that will get us through the first MVP. After that we will start working with more traditional ways of marketing.
Our focus is to educate people about DeFi and be the gap between very complex protocols and projects.
We are approaching this a few ways, one of these is [that] we’re building IP in our service delivery model by putting together a front-end simple application that is familiar to everyone. At the backend we have a team of analysts, quant traders, portfolio managers and developers that are building an automated allocation, analysis and secure portfolio management suite that doesn’t exist today.
A large part of this is security focused to remove the risks that a single individual would be exposed to trying to earn income form DeFi whilst it is still evolving and exposed to vulnerabilities.
Daniel Dal Bello
When you mention that a large part of your approach is security focused, what do you actually mean?
What risks are you removing that a single person would be exposed to if they went out on their own?
We have identified critical systems and will continue to stress test these alongside market related technology security scenarios to mitigate and remove points of failure across our operating environment including DeFi instruments held in our portfolios.
We are building in-house technology solutions and employing industry leading experts in their field such as data security consultants who are supported by our various oversight, enterprise and risk management committees and frameworks adopted from traditional fund and capital markets best practices.
Our portfolio management system automates many functions and interacts directly at the protocol layer to place allocations, manage disposals and support price integrity.
Daniel Dal Bello
Thanks Justin, but I have to come back to this from your prior message, “a large part of this is security focused to remove the risks that a single individual would be exposed to trying to earn income form DeFi”.
What risks and how are you addressing them?
Contract risk and vulnerability, analysis of TVL [‘Total Value Locked’] in pools and the relationship between their rate of growth compared with their attractiveness to be exploited, and quality of audits to name a few.
What do you think [will happen] if Ethereum starts to choke? DeFi will move to a new platform? And what is YIELD’s strategy if that happens?
I think smart contracts will become more and more sophisticated which will mean that there will be more and more use cases around these which eventually will lead to mass adoption.
There will be more competition to Ethereum, who are already leading the financial revolution. It’s here to stay and banks will become more obsolete. Within 12 years time, 80% of financial firms will either go out of business or be rendered irrelevant by new competition. This comes with changing customer behavior and advancements in technology.
Do you plan to build partnerships with local cryptocurrency developers and local projects in various countries to make the use of YIELD more global?
Yeah absolutely, we have good partnerships now but it’s about long term partnerships to provide real and impactful partners. So, yes we are making partnerships and many are coming in the coming weeks.
We are targeting a global audience from day 1. We are already working with and continuing to build out alliances with other professional actors in the DeFi space. Some of these are technology led, all of them are knowledge driven with the aim of constant improvement and to pass the benefits back to our customers. We will announce these as we go and on the way in to our live launch.
Do the centralized aspects of your project impact the DeFi label and focus in any way?
For example, DeFi-focused projects and exchanges like IDEX have been heavily criticized in the past for implementing KYC and AML.
We are a Fintech company. People who want to directly invest into DeFi will. Those who want to comfortably earn yields powered by DeFi in a digital banking infrastructure will opt for companies like YIELD as there is a big market and we are a bridge for mainstream people to access DeFi safely.
Daniel Dal Bello
We noted that as part of creating that ‘similar experience to traditional digital banking’ you are wanting to offer fraud protection and insured wallets.
How do you provide that in practice? How are user funds insured?
We work with BitGo for customer wallets that provide an initial insurance layer and we are also contributing a portion of APY to a segregated insurance wallet. This allocation will be conducted weekly, is on-chain and will be audited monthly and disclosed in our monthly fund performance report that includes the YLD treasury rebalancing metrics as well.
We are in discussion with a number of other Insurtech and crypto-insurance providers to bring innovation around this hybrid tier-3 tertiary capital reserve, this will include reinsurance and FDIC styled protections as we grow.
To build on this, I’ve noticed this being mentioned before: “YIELD is for DeFi what Binance was for the token evolution”.
Firstly, what do you mean by this and what is your primary point of differentiation in the DeFi landscape?
From an awareness perspective, how are you going to acquire this kind of reputation and importantly (as DeFi continues to evolve) keep it?
We are building what we see as a complete product for DeFi. We offer a safe way to invest into DeFi. Much like Binance we aim to provide an easy to use application where anyone can create an account, deposit cash/crypto and begin earning yields powered by DeFi.
The Yield App team holds around 25% of the total token supply, is there any particular reason why the team has to hold such a large amount of the total supply?
I noticed salaries, bonuses and expansion mentioned.
We have a large team and advisory staff. We are now a team of 25 and soon to be 50. Most tokens will be used to recruit top talent and advisors to our team.
t’s all locked up for at least 24 months and milestone unlocked.
What makes you most proud and what is your favorite part about YIELD?
The team we have put together. We have a team of motivated and very experienced and successful fintech and crypto entrepreneurs. We have a complete team from top developers, product team, finance, DeFi, and marketing to build a strong company.
We bring wealth to normal people that don’t have the time or money to deep dive into DeFi. Also, I’m happy about working with the team that we have, which I think is one of our biggest strengths.
Daniel Dal Bello
You make mention in your documentation of a banking license which we know are generally difficult to obtain and come with great expense, both in the form of time and money.
These can also differ greatly in terms of the true value or impact a banking license gives you. What I’m getting at is that some of these banking licenses can be more vanity than value. A license from the US or Hong Kong carries a lot of punch.
Can you tell us a little more about what jurisdiction your license is from and what that license enables you to do?
To build on this, the YIELD project itself is relatively new, so how did you manage to get this done so quickly?
Most regulators are looking for professional service providers that employ best practice and are also best positioned to educate and drive the licensing regime rather than fight it, the same is achieved with Beehive.
YIELD has already successfully acquired an offshore banking, securities and fund management license to support our launch.
Typically, it takes time to reach multiple jurisdictional regulatory approvals so in that respect we are setting out our intentions from the start and will continue to add licenses as we go for all of our activities.
We have a regulatory roadmap and will adhere to global standards as we move forward such as MiFID, MiFID II, for AML we work with industry leading Regtech providers to strike a balance between over-aggressive and cumbersome KYC and a frictionless onboarding journey for our users.
We are building SOC compliant technology infrastructure and processes, we have documented sandboxes for product and strategy testing, and the founders and managers are public and we will continue to advocate from the front to set the standard for mass adoption and fair oversight.
You mention in your documentation that you’ll be saving your users a lot of fees in the context of on-chain transactions with Ethereum, how are you achieving this?
We’ve recently seen an uptick in projects opting for layer-2 scaling solutions to overcome this and curious to know if you have looked at any!
About the layer -2 solution, I don’t think we are there yet with a lot of projects that it would makes sense [for] us to start looking into it. We for sure are planning to in the future once there are more players leading that game.
The simple answer is economies of scale, by aggregating capital, [and] employing technology solutions to compliment the portfolio team of experts, we are in a position to take advantage of opportunities that are not available to an individual participant.
This is why we are able to offer access to the asset class for as low as a $100 stake, we are leveraging the expertise, systems and our relationships to provide out-performance [in] a secure environment.
Hillrise Capital is an independent research and advisory firm exclusively focused on blockchain startups and crypto-assets.
YIELD are working to democratize DeFi through their mobile and web apps, insured wallets, debit cards, fiat gateway and more.