A conversation with the founder of XCarnival: Create financial products that don't exist in traditional finance and empower the public to do so

原文标题： The World Needs Better Synthetic Assets 》

Original source: Mohammad Musharraf   

Leon Liu, founder of financial sector-focused synthetic asset DEFI project XCarnival, sat down with Hacksoon to discuss various aspects of synthetic assets and their importance in the DEFI space.

Host: Hi Leon Liu, can you tell us your encryption story? How did you first get into this field? What made you think of XCarnival?

Leon Liu:Let me introduce myself briefly. I live in Melbourne, Australia, and started working in the blockchain industry in 2016. I used to be a partner of BGL, the largest blockchain company in Australia, and founded Australia's first compliant and licensed blockchain fund. I am also a veteran miner, having been ranked in the top 80 in the global Defi Degen test by Atomic. Blue. In addition, I am one of the largest Chinese KOLs in the BSC ecosystem, with a community of over 50,000 people.

I had the idea for XCarnival when I was having some trouble mining Synthetix and Mirror. Synthetix, in particular, was very difficult for me to pick up, even though it was an experienced miner. At the same time, I'd like to know more about what synthetic assets can do beyond synthesizing U.S. stocks or predicting currency prices. I did a lot of research and was eventually inspired by an article by Hart Lambur, founder of UMA. Why not try to challenge the most interesting part of synthetic assets: creating financial products that don't exist in traditional finance and giving the public the ability to create them.  

Host: Can you briefly explain what synthetic assets are and what XCarnival is trying to achieve in this space?

Leon Liu:You can make synthetic assets for just about anything by using some assets as collateral to create freely tradable toKEN digital assets.

A synthetic asset is a portfolio of assets that has the same value as another underlying asset. Investors do not need to actually own the assets, can trade the corresponding synthetic assets to earn income. In theory, you can synthesize tokens of any asset in the world and bet on changes in its price or quantity. What XCarnival wants to do in this space is bring this esoteric concept to the masses so that anyone can take advantage of this feature and create all kinds of interesting synthetic assets, investment returns.

Host: So far, the synthetic asset market has been concentrated in the hands of the big DEFI investors. In addition to motivating participation, how is XCarnival aiming to make this market more inclusive for all experience levels?

Leon Liu:Indeed, the current leading synthetic asset agreements are more focused on high-end users, which refers to the financial knowledge, technical ability, financial strength of the user.

For example, Synthetic not only charges high transaction fees, but also requires users to learn and understand a large number of new terms and acquire knowledge. Many people on the XCarnival team see this pain point in their experience and are starting to come up with the idea of creating composite assets that are easier to use. So from the very beginning, the team has made "making products that more people can use easily" an important part of our vision.

In fact, XCarnival doesn't require users to know what a composite asset is. All you need to know is that there are lots of interesting markets to invest in. It's kind of like playing a game on the Xbox. Players don't need to know how games are made, they just need to find games that are fun to play... That's all.

Of course, if you don't find something you like, you can also try to spend a little money and use a template to quickly make a game that you think is fun. If the game gets more and more popular, you can make a decent return. What XCarnival is trying to do is simplify the build process, preferably in 20 minutes.

Host: Using synthetic tokens as decentralized stores of value, we are seeing the introduction of traditional investment products to blockchain. What progress has been made, and when do you think we'll see it go mainstream? Also, how do you think this will affect the adoption of DEFI and blockchain?

Leon Liu:The key to this question is how to define "mainstream". If by "mainstream" I mean outsiders who don't understand blockchain, like neighbor John, then I don't think we're far off. (Adoption of synthetic assets will be slower and more difficult for mainstream investors because of the greater compliance requirements.)

Take the example of Mirror, a synthetic asset protocol. We no longer need to open an account in US stocks. We can invest in some US stock tokens without using a Broker. But the difficulty lies in how to get through the channels of fiat currency investment and withdrawal, and how to let users skip a series of technical barriers such as setting up wallets and entering contract addresses. The Nbatop Shot is a great example in this area, and one that XCarnival is learning from.

If the mainstream market (individual outsiders and mainstream financial institutions) starts investing through synthetic assets, the impact on DEFI and the crypto world will be as big as the allocation to BTC by US public companies this year. Because it means that a lot of new blood will flow from traditional finance into the crypto world, fueling a lot of investment demand that is now being suppressed by various regulations. And since DEFI and blockchain greatly improve the operating efficiency of financial products and reduce the operating costs of traditional financial institutions, this release of productivity will bring a huge wealth effect, benefiting every segment of the industry.

Host: The concept of NFT clearing is still in its infancy. XCarnival is doing the same thing. Is that hard? What challenges do you face in the development of the clearing regime?

Leon Liu:The NFT pledge lending market now faces two major challenges:

1. How to price pledged NFT

2. How to liquidate a position when the market fluctuates violently

NFT is a relatively illiquid collateral, which means its value depends more on the expectations and valuation of buyers and sellers at the time of transaction, much like the art market. So you can see that works of art are often auctioned to determine their price. In XCarinval's view, how much an NFT is worth and how much it can borrow should be decided by a buyer who really knows or is willing to bid on the NFT.

That's why XCarnival has created a peer-to-peer platform for pledgers and lenders to negotiate and ultimately reach an agreement. Every NFT may be different, and it is unreasonable and unrealistic for platforms to judge the value of an NFT.

As for the second question, XCarnival follows the rules of the traditional pawnbroker industry and will not consider clearing NFT in times of market volatility. It just needs time as the only liquidation condition. If the time is up and the mortgagor fails to repay the loan on time, the NFT will be auctioned directly by the platform. If the auction price exceeds the amount lent, the money is transferred to the borrower. If the auction fails, the NFT will be transferred to the borrower.

Host: XArena is built on a model of game consolidation and monetization. How do you see the world of blockchain gaming in the next few years? How useful will concepts like gamified NFT and XArena be?

Leon Liu:The team is tweaking the description of XArena. In fact, we use synthetic asset tokens to allow everyone to participate in an investment of a gambling nature, rather than simply betting on size. Just like everyone invests in gold, stocks, and bitcoin, XArena is the opportunity for you to track a variety of interesting assets and participate in investment opportunities.

We tend to have everyone create a market with a certain time horizon and volatility. For example, rather than making predictions about the outcome of an NBA game, we think it's more appropriate to generate tokens for a team's winning percentage over a season.

So the competition is not in betting projects like Augur, but in Synwide-footing and mirrors. XArena doesn't exclude existing financial products, it just expands the flexibility to create them. So our potential market size is in the trillions.

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