The Data Portal to “de-complex” DeFi
We have founded Kasuria to support professional investors and asset managers with the complex structure of Decentralized Finance by lowering the entry barriers through high-quality data for Research and Reporting.
Theses on Crypto
The creation of a new form of asset started in 2009, as everyone knows, with Satoshi Nakamoto’s seminal paper on Bitcoin. Such things don’t happen often and they bring fundamental shifts to many industries. Hence, there is no doubt that blockchain will have profound implications on financial services, and in particular to the asset management industry.
A lot has happened since 2009: Digital tokens of all kinds have established themselves as a new alternative to invest in and support investors to protect their wealth against low interest rates or exorbitant price increases, e.g. in the real estate sector; different blockchain ecosystems blossom as enhancements to the original blockchain of Bitcoin. Most notably it’s those with smart contract-features, especially Ethereum, but also Solana, Cardano, Avalanche, Terra or Fantom. These rather juvenile ecosystems have added on top to blockchain’s feature of decentralized immutability, the component of automatic enforceability that has significant implications.
We at Kasuria believe that the financial services industry with its purely virtual goods is the natural starting point for the persistent applications of smart contracts. After having established the underlying infrastructure to satisfy the basic needs like custody and security of digital assets, customers will want to maximize their returns and to control the implied risk of their investments. We want to embrace these new possibilities by helping professional investors to bridge the gap between the traditional and the decentralized finance world to their benefit.
Global Challenges of Financial Systems
Decentralized Finance (DeFi) that one could watch developing over the last few years, is here to stay and currently only in its infancy. By now, it is one of the fastest growing technologies in the history of human mankind. Through cost-effective smart contracts and the high attention this area has received over the past months, DeFi is prone to solve some of the existing challenges of traditional finance and provide possibilities for its actors to generate sufficiently attractive yields (again). DeFi is rebuilding and remodelling existing business models in finance (and elsewhere) that have been created in the last 150 years mainly by banks. This time in contrast, there is no need to have the trusted intermediary to facilitate the transactions – DeFi solves this dilemma, and is faster and more reliable in its execution. Many people therefore rightfully see DeFi as the alternative – if not the rightful successor – to financial systems that are governed, ultimately, by central banks and from the time of the financial crisis 2008 until now, we can see to what this has brought the economy: To its extremes. Professional investors and in particular asset managers have to bet on DeFi to hedge against the ever growing inflation.
DeFi & Yield Generation
One of the main advantages of DeFi is its feature of composability. In simplified terms, the output of one transaction can be used as input to the other, trustless and, if needed, even automatic. Furthermore, as many of the smart contract protocols are governed by tokens, the users of the protocols (e.g., lending or staking of tokens, or providing liquidity) are able to receive certain governance tokens of the protocol itself as a reward for their interaction with the smart contract. These can then further be used for lending or staking to generate an additional income, if the user wants to. Many services have been generated to optimize these income streams, e.g., by either pooling investments to reduce transaction costs, i.e. the notorious “gas fees” on Ethereum, or by quickly re-allocating investments based on the best possible yield to be expected. Yearn for example is one of the protocols that allows for both (Yearn calls it “Lending Aggregation”, and “Vaults” which are basically capital pools).
This has not been possible before in the traditional world and that is exactly the spot where the high yields are being generated, besides, of course, the factor of “lack of appropriate experience” which naturally increases the volatility of the investments.
Inherent high Complexity of DeFi and Needs of Investors
Traditional institutions, in particular banks and asset managers, can’t hold out to not participate in it going forward. They will be forced to interact with this strengthening ecosystem.
The underlying hypotheses driving these developments are
(a) the scarcity of attractive investment opportunities to generate a sufficient investment return, combined with (and at least partially caused by) a low interest rate but high inflation environment, and
(b) the customers of the asset & wealth management firms that will demand to take (at least) a little exposure in crypto as it becomes a stable and reliable asset class to invest in – in particular through regulatory clarity that we expect to come in the next 1-2 years, and
(c) the demand to remove friction, i.e. reduce settlement time and transaction costs, caused by middlemen that are involved in processes, but can be substituted through smart contract protocols.
Kasuria lowers the entry barriers for these institutions and provides the necessary data for research and reporting: Every actor – be it an institution, corporate or other party that manages money – who uses or invests in DeFi in the future will sooner or later be reliant on data sources which reflect all her transactions and value streams for reporting purposes. Furthermore, to allocate best the financial assets of their customers, actors will have to spend additional resources (i.e. money and time) for research, or more specifically, for assessing and understanding DeFi or other crypto investment opportunities in depth before executing the investments.
Kasuria’s Value Proposition
Keeping track of investments will thus get more and more complicated – P&L, balance sheets, tax statements and all kinds of data-based reports will be nearly impossible for business-focused applications, especially multi-chain. “Deep Tech“ Blockchain analytics’ companies on the other hand are focussing on trading signals, market sentiments, compliance and similar high-level reporting needs and are far away from business applications. There will be a large demand for a middleware that connects, reads and interprets raw blockchain transaction data and produces high quality enterprise-grade data in an auditable form for business applications to rely on – independent of locality and use.
Furthermore, the convenient presentation and selection of the concrete DeFi strategies to be invested in, with the relevant investment metrics (risk- & return-oriented) that these investments would be exposed to is facilitated and made easy (pre-execution!). Like with compatible Lego bricks, the single investment steps that a complex DeFi strategy is composed of can be simulated comprehensively so that the customer sees the respective would-be cashflows and can adjust her expectations accordingly.
Kasuria is the provider who serves these particular needs based on quantitative data – multi-protocol & multi-chain: The professional customer can either use our web-based dashboard, connect his wallets or get access to our APIs. In return, she receives analyses for all her transactions in all protocols on all major blockchains that can easily be imported into, shared with or attached to any of her existing business tools – think of Kasuria as the “Bloomberg for DeFi” or the main data source for SAP in the DeFi world.