The Drip #5
For this edition of The Drip, we are stepping away from the orthodox breakdown of market sentiment and various project breakdowns, and are instead going to piggyback off this morning's massive news from IOHK: onboarding close to 6 million people onto the Cardano blockchain.
We will discuss what an interoperable world may look like with the projects that are associated with Cardano right now.
If you want an update on Bitcoin and the market, read the most recent Monday's Market Outlook — you won't regret it.
Sourcing, nurturing, and closing contracts with nation states is no easy feat. This type of deal takes time, resources, and a considerable amount of trust, which means the barrier for entry is extremely high.
This is especially true when nation states in Africa are offered every product on the market, as multinational corporations want to sink their teeth into profitable emerging markets.
At the same time this is happening, life-changing technology and tools are being created in the cryptocurrency space that, when directly applied to economic disparity in Africa to the rest of the world, has the potential to foster immensely efficient production, markets, and infrastructure.
One such technology is DeFi. At the time of writing, DeFi has around $63 billion dollars in total-value-locked (TVL), but almost unanimously caters to western consumers. Furthermore, most tooling that exists is too expensive for even western consumers to utilize.
Take into account these two narratives:
- An entire continent with a dire need for cheaper alternatives to traditional financial services.
- Traditional financial alternatives that are also too expensive for people to utilize.
You can see there is a massive opportunity for projects that can bridge this divide. Cardano has spent years in African nation states developing relationships, fostering education, and promoting their product.
Being the bridge for consumers-at-need — and a revolutionary ecosystem offering inexpensive and inclusive financial products, infrastructure, and education, — Cardano and its associated platforms will bring to the cryptocurrency space adoption and interoperability unlike anything we've ever seen.
This will be the standard for which all projects will interoperate.
Think of it like this: you're 10 years old again, and you are going to the county fair. Your mom gives you $20 to get food, drinks, and play games with your friends. Today, that $20 usually doesn't go very far when used to purchased food, drinks, and activity that are valued by the dollar.
But, when you make it to the entrance of the county fair, the ticket lady at the booth has a conversion chart, which states "$20 = 100 tickets." You've now entered into an entirely new ecosystem where consumer goods are valued at the price of a ticket.
The equivalent version in Africa looks like this: you're an 18 year old graduate in Ethiopia, who needs access to financing to pay for university. The problem, for you, is that loans are too expensive to take on.
Thankfully, you've been onboarded onto the Cardano blockchain via Atala Prism, and use your hard earned money to purchase $ADA. Your $ADA is then used as the denominated value as you shop for financing within Cardano.
It's an entirely new financial system that is multinational on the protocol level, and allows for secure, trustless, and permissionless functionality. Because of the access to consumers who are in dire need of cheaper alternatives to finance, data, and products, projects that are deployed on the Cardano blockchain benefit in tandem.
To give a better understanding on how Cardano's success can help other blockchains, we wrote some examples on how interoperability can now start to blossom.
DeFi products like Liqwid Finance will offer consumers the ability to shop for loans with their algorithmically structured borrow/lending market.
In Africa, current centralized financial incumbents offer loans with 22-25% interest rates, which is predatory at best. Liqwid is working on revolutionary credit concepts that will allow for no-collateral loans with .25% interest rates.
This will allow people to originate a loan from Liqwid, transfer it to a stable coin, and convert it back into their legacy currency to utilize traditional products with a cheaper loan — upwards of 80x cheaper.
At the same time, Liqwid Finance needs to maintain data feeds to stabilize their markets autonomously, thus they need a decentralized oracle.
The industry standard for oracles is Chainlink. But, as we said, it is too expensive to use if we want to successfully penetrate African consumers. Marking up the price for data feeds means marking up the price for loan origination, which means more expensive interest rates.
This is where Ergo can come in.
Ergo provides oracles in a more decentralized and inexpensive way by allowing oracle providers to pool their data feeds together, and by removing the tokenization of data. By utilizing Ergo (a sister-blockchain to Cardano) Liqwid Finance can continue to offer cheaper loans.
As Africa matures as a nation, its people will become more connected to the internet, IoT, and mobile applications. Africa is projected to push out nearly 34 zetabytes of data traffic per year, which is roughly a few trillion gigabytes.
As Africa becomes more connected via mobile phones, accessing blockchain applications will become second nature. With that being said, as it stands today, it is relatively hard to interact with blockchain data with a PoS consensus mechanism because it requires considerable data. With Ergo being a PoW blockchain they are able to provide lite-client access using NiPoPoW's, which only needs a tiny subsection of data to interact with the blockchain.
Ergo can provide that functionality to Cardano users.
With the above projects in mind, there is now a flourishing and inexpensive alternative economy, all taking place on Cardano and revolutionizing the way Africa interacts financially.
At the same time, Africa, alongside the rest of the world is undergoing the beginning stages of the 4th Industrial Revolution: Artificial Intelligence.
Artificial Intelligence is estimated to double an economy's gross domestic product (GDP) in a 10-year time frame from its efficiency alone. Still, AI needs an incredible amount of data to work properly, the same way humans need food and water, to survive.
With millions now onboarded onto Cardano's blockchain, data can be shared with interoperable projects (like SingularityNET, the first Ethereum project to port to Cardano). This alone will spark a data-injection large enough to kickstart the SingularityNET platform in ways we haven't yet seen.
SingularityNET is very important for emerging market countries that will be left behind without AI-friendly policies that allow for AI integration into infrastructure, markets, and supply chains.
As it stands, Africa spends an obscene amount of money for AI products from multinational corporations like Google, Facebook, and others, which eats into its spending. With SingularityNET they can purchase much cheaper AI tooling and products to integrate into existing infrastructure.
SingularityNET's AI agents, using its domain specific language (DSL), can form organizations of patterns (i.e. thoughts) and constructively create a bias for African people using their data. This will allow AI agents to develop an understanding for their needs in a more inclusive way to efficiently transact data between other AI agents on the platform.