Go to market strategy

We have previously discussed how to tokenize assets, which assets can be tokenized and how you can access finance by borrowing against tokenized assets on a decentralized money market.

We are pleased to report that we now have the technology solutions in place to tokenize assets, and have also built the decentralized money market. Getting it to market has a set of unique challenges.

We have built a crypto native product, however with decentralized finance you need absolutely vetted technology. We are not resourced for audits or to hire the expensive tech developers that are needed to achieve that. In addition crypto native investors will probably want more liquidity than what our money market is in a position to offer at present.

In addition USDT is now supported by Compound with very high degree of liquidity and high interest rates which means couple of our key value props around going to market are now lost. However we believe this actually does us a good turn, we will discuss this later in the article.

If we cannot hit crypto native investors, our other options are the regular mom and pop investors. But they are generally not across metamask, and we as of now cannot take cash from them and buy crypto for them as it creates regulatory challenges.

In addition we cannot promote (as of now) the decentralized money market to them openly as it creates complications around promotion of potential security like products.

And as Maker and Compound steadily add more and more assets, offer high yields and high interest rates, our value prop becomes harder to defend as time progresses.

But there is a solution which relies on our strengths.

We know how to write prospectuses and can create a full retail offer document that will allow us to take cash from retail investors and deploy on their behalf in a fund style manner on Compound or other money markets. We can rebalance the funds actively to always capture the highest yield.

We will need an AFSL as this would be deemed an investment company but we can procure a dealing license to do that. We will face FX risks vs AUD but we have to make the investor aware of them and pass them through. Plus we are in talks with TAUD which could potentially resolve this if Compound starts accepting TAUD. Given the decentralization we can put up proposals to that effect which will address any FX issues in the long run.

This means we can promote a high interest, highly safe, highly liquid savings account style product to mom and pops with a beautiful user interface which we already have built.

We act as investment managers in the short run and can display in real time what funds were deployed, what interest is being achieved, and allow an investor to withdraw their funds anytime they want.

We can charge a small spread and a transaction fee to make this revenue positive.

There are many managed funds, business checking accounts, family office funds, SMSFs that are sitting on ample cash reserves that can safely redirect their funds to our defi money market.

We solve the problem of fiat access for them.

Over a period of time as we build out distribution we can start allocating some of the funds to our own defi money markets which has real world assets as collateral. The eventual goal would be to transition away from 3rd party money markets to the real world focused money market which we have built at app.konkrete.finance

This strategy would allow us to build out distribution while perfecting our own technology in a safe manner.

Eventually on pure crypto money markets interest rates will always gravitate to 1–2% above bank level because of the high level of security and liquidity they offer. If we are able to build out our own distribution then will be able to offer 2–4% above bank levels and still offer strong safety and liquidity as we are dealing with assets such as first mortgages that are typically not liquid. We will be able to sit slightly higher than Compound and other money markets at that point.

Eventually this fund may be spun off or wound down and we will try to educate as many users to use the money markets directly.

Our understanding of regulatory structures puts us in a unique position to solve the challenge of connecting the real world to the onchain world.

Step 1 would be a lander and an EoI, after that we will start the process of setting up the required legal structures and lodge a prospectus etc.

I am extremely confident that given the strong value proposition on offer, this strategy has a high chance of working. We will report back on our progress in the coming days and weeks.