Mike Dudas, an investor at 6th Man Ventures, recently interviewed Gabriel Gruber, the founder of Exactly Protocol, in an AMA (Ask Me Anything) session. This article summarizes the talk that has been live-streamed on Twitter Spaces.
Gabriel Gruber, the founder of Exactly Protocol, started the talk by sharing the inspiration behind the creation of the Exactly Protocol. According to Gabriel, the goal was to find a way to utilize new technology like Decentralized Finance (DeFi) to solve real problems and improve existing processes.
In particular, Gabriel and his team identified the need for a fixed-rates in the DeFi ecosystem. He has explained that he recognized that most people receive a fixed monthly income and, for the same reason, need a fixed rate when borrowing money.
The Exactly's founder also discussed the current state of DeFi, stating that "the current use cases for DeFi are limited and resemble a decentralized casino. The focus is on obtaining more tokens through different protocols rather than finding new ways to utilize the technology to connect with consumers." He emphasized the importance of finding a different approach to DeFi that goes beyond the current limitations and allows for greater adoption and connection with the end consumer.
Asked about the challenges he faced while creating Exactly protocol, Gabriel said, "unlike many other DeFi projects, which are just forks of existing protocols, we built everything from scratch. That was a big challenge for us. Despite these challenges, the potential benefits of Exactly make an effort worthwhile."
To create a secure DeFi protocol, Gabriel believes that a team with diverse skills is necessary, including expertise in math, Solidity development, Growth, Business Development, and other areas. He also emphasized the importance of multiple security and math audits and a bug bounty program in ensuring the protocol's security.
As questioned by Mike, Gabriel emphasized that Exactly Protocol's current challenge drives adoption and liquidity. Gabriel said, "In the early stages of launching a product, achieving both supply and demand in the marketplace can be challenging. This is known as the «chicken and egg problem». To address this, we need to focus on scalability, reduce the cost of transactions, and connect with various apps, wallets, and custodial and non-custodial institutions. This process will take some time, but ultimately, our goal is to use new technology, such as Exactly's marketplace for credit, to improve the back end of traditional finance."
Gabriel and Mike also discussed the possibility of integrating DeFi protocols into traditional fintech apps, stating that trust is crucial in building partnerships with these companies.
To that end, Gabriel emphasized the transparency of Exactly Protocol, the thoroughness of the audits, and the security measures in place to ensure its trustworthiness. He also pointed out the benefits traditional fintech companies can gain by integrating DeFi protocols into their platforms, such as providing users with a broader range of financial services without the constraints of centralized finance.
Asked about Exactly's long-term vision, Gabriel said: "To gain adoption from traditional banks and financial institutions, it may be necessary to have two versions of the Exactly Protocol. One that is non-custodial and does not require identity verification, and another that includes whitelisting and KYC measures to meet regulatory requirements. This allows consumers to choose the best version of their needs and preferences."
To create a user-friendly DeFi protocol, Exactly's founder believes that transparency and simplicity are key. To that end, the team at Exactly has focused on iteratively improving their user interface (UI), including changing the names of certain features to make them more accessible to a broader audience.
Gabriel also discussed the potential for DeFi protocols to work together, creating a more diverse and flexible financial ecosystem. He emphasized the importance of composability in DeFi, which enables users to "piece different, quote-unquote, money, Legos together rather than being limited to a single provider or a set of products that do not work well together."
"This approach allows users to customize their financial products and services to meet their specific needs and preferences," said Gabriel.
Shortly, Gabriel believes scalability will be a crucial factor in the growth of DeFi. Currently, Ethereum has a capacity of only 14 transactions per second, which must be increased for broader adoption by traditional finance or end consumers.
However, he is hopeful that L2 solutions and other technological advancements will significantly increase Ethereum's scalability soon, potentially reaching 10,000 to 100,000 transactions per second. This would also bring down the cost of transactions, which is currently around a few dollars per transaction, to just a few cents.
Gruber emphasized that these developments will allow DeFi to connect with end consumers and become more than just a tool for whales and hedge funds. He said, "These improvements will enable DeFi to connect with end consumers and become more than just a tool for whales and hedge funds."
Gabriel and Mike also discussed the potential of NFTs (non-fungible tokens) to attract a broader audience to DeFi, particularly those related to virtual reality and the metaverse.
Gabriel noted that NFTs could represent real-world assets, such as real estate or treasury bonds, and be used as collateral. However, he acknowledged that these use cases might be slower to develop due to legal and regulatory hurdles.
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