Jessica Abo: Piers, for those unfamiliar, can you start by telling us about RDX Works and what you do?
RDX Works is a core developer of a ledger, such as Ethereum or Bitcoin or Solana. Ours is called Radix, and it’s a ledger entirely focused on decentralized finance (DeFi).
Decentralized finance is basically building financial products and applications on top of a piece of decentralized infrastructure (blockchain) designed to make it easy for people to create things like assets and services, in a way that is more digital-first than the current financial system we have today.
And so, if you’ve ever heard about things like Ethereum – platforms that allow you to build solutions like decentralized exchanges, decentralized money markets or decentralized financial products – that make it easy for people to invest, save and trade.
It’s actually a new field of technology. Just like the Internet was a new area of technology in the 1980s and 1990s, that’s what we see today – this new revolutionary system that allows you to replace current financial systems like banks and build a new way of building people.
Why should we worry about this?
The way I often think about the current financial system is that it’s a bit like an archipelago of poorly connected islands. So each bank has its own internal system, its own internal ledger. Each exchange has its own internal system, its own internal ledger. But really, if you look at the banking system, a lot of transactions are done by Excel spreadsheets that are sent between companies for reconciliation because systems don’t talk to each other.
Now, kind of like before the Internet came along, people did things by phone or fax, but there was no uniform place where you could easily send information. And right now, there really isn’t one unified place where you can create financial assets and move them between companies. And that’s what this infrastructure is for.
And I know it sounds really simple, but it’s just as simple as when we moved from newspapers to reading things online. It was made possible by a lot of new technologies and new platforms that were created but could not have been made before.
One of the great revolutions of decentralized finance is this ability to create liquidity around long-tail assets. So when you think about the current financial system, you think, well, Apple; I can start buying and selling Apple stock. But if you are an londonbusinessblog.com and you are building a business, even if it is a relatively large company, your equity is not very liquid. Your debt is not very liquid. And that actually makes it harder to raise funding, it makes it more expensive to raise funding.
And what this infrastructure does is make it radically easier for people to access the financial ecosystem and do things that get out of their way of their business. It empowers entrepreneurs to do what really matters, which is building great products for people.
Where does Radix fit into the DeFi universe?
When Ethereum first came out, people didn’t really know what the purpose of these public ledgers was, what the idea of smart contracts was. And so they started playing with different products and services. But it soon became apparent that the real thing to use for these public ledgers is actually decentralized finance.
However, Ethereum and Ethereum’s competitors are not really designed to build an asset-first platform. So we think that decentralized finance will eat up the 400 trillion global financial system. It’s going to move everything to public ledgers in the same way that all information was moved to the Internet.
But to do that, you actually have to build a piece of infrastructure designed for the application being built. And what we found is that it is very difficult to build decentralized finance these days. You see a lot of hacks, a lot of exploits, a lot of problems that all have to do with the tools that entrepreneurs have at their disposal to build with these systems.
So what Radix did is we spent the last three years working with DeFi developers and DeFi projects to build an incredibly intuitive experience to build these platforms and services.
You can think of Radix as an operating system, or a platform on which people can build applications. We’ve created a programming language and ledger that will make it very intuitive for people to harness the power of this new type of technology and make it much easier for entrepreneurs thinking of starting a business in Web3 , or starting a business in Web3. DeFi, or starting a crypto business, to be able to go from idea to production code and reduce that from two years to about three months.
In simple terms, what is a smart contract?
Smart contract is a really difficult term. Because it’s a bit of a misnomer, isn’t it? Legally, it is not a contract. A smart contract is a piece of code that resides on a ledger. The code itself can manage money instantly. A simple example of a smart contract is: if I have some Piers tokens, I can send them to a smart contract. And the smart contract can say, okay, well, if someone sends me 10 Piers tokens, I’ll send them 20 Radix tokens.
But the smart contract does it alone. It’s not on a server running on AWS or anything like that. It’s actually part of the ledger. Now this superpower is critical because it allows you to create more transparency about how finance works. Now when I go to a bank, I send my money to the bank, and the bank has its own ledger about whose money is what. And then I have to ask the bank to take my money out.
With a smart contract, all that money is on a ledger. And then all the code that deals with the logic of who has access to that money, what that money can do when interacting with other applications on top of the ledger, is all managed directly through the logic of the smart contract itself.
So you can think of it as a program that exists in a ledger, which follows the rules related to asset management on its own without a company having to do it in the background.
Where do you think DeFi is going? What are some of your predictions for 2023?
I think 2023 will actually be a consolidation year. It’s going to be the year when people learn the lessons of what happened in 2021 and 2022, and figure out what the real value was and what was created; things like how to create liquidity around long-tail assets.
I think what you’re going to see in 2023 is a lot more real-world assets. So things like building up debt, things like corporate financing, project financing — that’s all going to go into the public ledgers. And you’ll see what we think of traditional assets are increasingly merging into this unified layer of financial products and services.
A lot of people talk about NFTs and the Bored Apes artwork and stuff like that. This is a kind of toy, but it is a toy that represents what is really possible to create with this technology. And you’ll see more serious companies come in that build things that are actually more exciting than traditional finance, but use all the tools and power available in DeFi toolsets, like what Radix is building.
Who do you think should go into crypto in your opinion and who do you think should avoid it?
Everyone should take the time to learn. Not necessarily to get into, this is what my company is going to be doing in this space. Because we are still at an early stage. These are still the early days of technology. But go and use Scrypto, our programming language, which we built to make it as easy as possible for people to get started with Web3 and DeFi. It’s a great way to learn the tools and understand what the technology can do for your business.
And that’s the exploration that’s needed now. This is where the entrepreneurs who really take the initiative in the following cycles will have the most opportunities for their company. Because during these bear markets, they have taken the time to understand how the technology can apply to their business, and think about it for a long-term strategy of how their business will win as a result of this new toolset available to them.