Opportunities and Challenges in DeFi : Data ownership, Credit Oracles and the Birth of CreDA
On Mar 24th, Elastos co-founder Sunny Feng Han was invited to attend the Jubi 8th Anniversary Livestream to talk about ELA. He shared his thoughts on the opportunities and challenges ahead in DeFi. In short: Elastos is constructing a next generation internet which fundamentally protects personal data ownership and turns that personal data into wealth. The team is working on a credit oracle project named CreDA, introducing the concept of data credit as a brand new model for DeFi. The following is Sunny Feng Han’s interview:
Moderator Dana: With Sunny Feng Han as its co-founder, Elastos has become one of the most well-known public chains in the blockchain industry. Sunny has recently done a good deal of promotion for a new project called FilDa, the first Huobi HECO-based cross-chain borrowing and lending DeFi project, which has received a lot of attention lately. Mr. Feng Han, can you please say hello to all your fans here?
Sunny Feng Han: Hello everyone. Some of you might be wondering what Elastos is. In short, Elastos is building Web 3.0, which is the infrastructure of the future Internet. Why do we need to build the Internet of the future? The main goal is to protect personal data and turn that data into wealth for each of us. Towards this end, next month we are launching a credit oracle project called CreDA. The purpose of CreDA is to use our data to provide credit and thus create wealth. Please stay tuned for further announcements.
Moderator Dana: Can you briefly introduce your experience in this industry and tell us what aspects of Elastos you are currently responsible for?
Sunny Feng Han: Speaking to my experience, I entered the blockchain space in 2013 when Di Deng introduced Bitcoin in a live broadcast. I was very excited at that time and believed that Bitcoin represented an important direction for the future. I mention this numerous times in my books including my new book titled ‘The Wealth of the Quantum Era’, the Chinese edition of which was just published. Later, I became an evangelist to promote the new decentralized wealth consensus model that Bitcoin and blockchain represent for our future. Soon after, I joined Elastos because I firmly believe the future internet should be able to protect personal data ownership and turn personal data into wealth. This is why we created the credit oracle: CreDA.
Elastos is moving steadily toward a fully decentralized community, so the role of any one person, myself included, is not as important as the whole. We have a robust and growing international and Chinese community. As a community member, my focus is to explore business applications on top of Elastos infrastructures. In addition to the HECO-based FilDA, we will also launch a credit oracle named CreDA as our next step. In other words, we are introducing the concept of data credit to DeFi.
Moderator Dana: Thanks for sharing. Will you briefly introduce Elastos for our community? What is the vision and mission of Elastos?
Sunny Feng Han: The mission of Elastos is to construct the next generation Internet for our future. Currently we call it Web3.0, which protects user data ownership and turns personal data into wealth. We named our current Internet Web2.0. On web 2.0, users can freely upload and download data, information and participate in various financial activities to complete payments and so on. However, a fundamental challenge is that users can’t own their personal data. Instead, giant companies do, making huge profits from our data that they don’t share with us. This is a typical public-owned economy, which is essentially different from our current economic model that has a very clear proof of asset ownership. This model has allowed us to prosper after our ‘reform and opening-up’.
Moderator Dana: What solutions or products does Elastos propose to realize this vision?
Sunny Feng Han: This is a great question. First, we recently launched FilDA, a dedicated lending and borrowing platform, on the Huobi eco-chain, HECO. This is already a very successful project. The total locked value quickly reached over $1 billion and is currently sitting around $500 million. Most fundamentally, we are developing a decentralized credit oracle on top of Elastos’s infrastructure. On-chain personal data can assist users in establishing their own credit. Off-chain data will be linked with a credit oracle in the near future. We will officially announce this project next month. This will be one of the flagship applications on Elastos. After completing the credit oracle project, we will have larger ecosystem applications in DeFi.
Moderator Dana: DeFi is a constant topic in cryptocurrency. We understand Elastos is proactively deploying various DeFi protocols. Will you please introduce the decentralized financial service platform, FilDA?
Sunny Feng Han: I’ve been friends with Shousong from Jubi for 7 years. When I entered the cryptocurrency world, I made my first fortune on Jubi.com. So, I’m really grateful to Shousong. Later, we established the DACA Blockchain Association together, the first private blockchain association in China; Shousong was elected chairman. Afterwards, we attended the World Economic Forum(WEF) event in Davos, Switzerland. I’ve had great business relations with Jubi from the start. On Jubi’s 8th anniversary, I sincerely wish them continued and increased prosperity.
The name FilDA reminds us of Filecoin. It is, in fact, related directly to Filecoin. The initial purpose of developing FilDA was to provide Filecoin mining farms with staking for loans. So, we partnered with a few major mining farms in China, which account for almost 50% of the entire computing power in the world. ‘FilDA’ is an abbreviation for Filecoin+DeFi alliance, which literally means it is the Filecoin mining farms alliance. When we launched this project, Huobi was developing its ecosystem chain, HECO. So, we launched FilDA on HECO and subsequently developed borrowing and lending services for other assets.
As far as our future strategy is concerned, FilDA can’t get broad enough development space through simple borrowing and lending alone. DeFi is a highly competitive market and some excellent platforms already exist. The true innovation is the development of CreDA in concert with the FilDA platform. CreDA introduces the concept of a credit oracle, which utilizes Elastos technology to provide users with credit based on their on-chain data and assets. Later, CreDA will be linked with off-chain data. We are creating an innovative business model that allows users to receive loans with their own data credit. For example, Filecoin mining farms can get loans without providing their own collateral.
Moderator Dana: As the first HECO-based DeFi project, what strengths or uniqueness does FilDA have in the DeFi arena? What issues does FilDA solve for the blockchain industry?
Sunny Feng Han: The positioning of FilDA in this industry is to merge with CreDA, the credit oracle, and introduce the concept of credit into the DeFi space. In other words, people will be able to collateralize for each other based on their data credits. One party can assist another in obtaining loans. Take the IPFS mining farm in Fuzhou as an example. The community can provide collateral for IPFS mining farms so the miners can take loans without having to provide their own collateral. Please note, for the FilDA platform, there is still collateral in place before the loan is issued. However, the collateral is not from the borrowers but from a third party who provides collateral based on the borrower’s credit calculated from both on-chain and off-chain data through our credit oracle. This is a brand new finance model enabling non-borrowers to provide collateral or warranty for borrowers.
What issues are we solving for this industry? Though DeFi has developed pretty well and reached a market value of over 80 billion, so far there is no decentralized financial platform that can provide lending service by using users’ own data credit. In contrast, the corresponding legacy services of banks are implemented using credit scores to offer clients mortgages such as loans against real estate. So, we introduce the concept of data credit into DeFi to allow users to borrow with data credit.
Moderator Dana: What are the major plans of the CreDA team in 2021?
Sunny Feng Han: FilDA is already a decentralized team. FilDA is not a company, nor does it have a CEO. Essentially, everyone is serving the community. Of course, the key point is to operate a decentralized financial platform. In this regard, the technical developers of the FilDA team have played a huge role. What we’re most excited about is the launch of the CreDA credit oracle next month. This will finally realize the concept of decentralized data credit.
Moderator Dana: So what do you think of the DeFi market abroad? Does Elastos have a strategy in this regard?
Sunny Feng Han: Many of FilDA’s businesses will be oriented to IPFS in the future, and the first choice for data storage on the credit oracle platform may also be IPFS. As for the Elastos global strategy, the primary concept and vision is to keep building the next-generation Internet. I firmly believe that no one in this world is more qualified than Rong Chen, the founder of Elastos, to lead the development of the next generation Internet. Over 20 years ago, when he was at Microsoft, he began to believe that the future of the Internet should be decentralized, including operating systems. He believes that the Internet should not be controlled by any company or platform. Therefore, he’s been working and persisting in this direction for 20 years. It wasn’t until he encountered blockchain that he formed the logic of a closed-loop industrial chain.
A new marketplace and new wealth can be created for users when ownership of personal data is authenticated and protected. Otherwise, what’s the benefit to the user if they own their data? To some extent, the manipulation by giant tech of our data is beneficial for users in the current model. Without new business models and new benefits for users, it will be difficult to replace the current internet with the next-generation internet and complete the transition. It is precisely because of blockchain and DeFi that we see a viable prospect for the next generation internet. FilDA and CreDA will enable users to use their own data to obtain credit and thus have the opportunity to create more wealth. These are the steps we are exploring and implementing.
Moderator Dana: DeFi experienced a boom in 2020 and has gradually returned to a bit of rationality this year. Can you predict the future market trends in DeFi?
Mr. Han Feng: This is a great question. DeFi experienced a lot rapid of growth in 2020. Lately, the DeFi market has returned to a bit of rationality, as you said. I think this is an appropriate description of the current state of the DeFi market. In essence, DeFi provides basic financial models that can meet our daily needs. Further steps in the continued emergence of DeFi will be about data and creating data credit for humans and other financial innovation to meet users’ needs. This is actually what banks, including Yu’e Bao, are doing now. I hope we can use decentralized technology to continue to create more innovation so more people can be onboarded and use DeFi platforms safely and confidently.