Welcome to Digital Security Frontier Vision: The Voice of the Core Builders from Global Digital Security Industry #32
This week we are welcoming John Wu from AVA Labs ! John Wu is President of AVA Labs, a company creating the next-generation blockchain platform. In this role, he leverages his expertise from over 20 years as a fintech executive and technology investor to create a blockchain-enabled solution for originating, issuing, and trading financial assets.
John joined AVA Labs as part of its acquisition of Investery, a SaaS platform he founded to facilitate investor discovery, management, and transacting of private market assets. Before Investery, he was CEO of the SharesPost Digital Assets Group, working with investors and issuers to enable compliant token trading at a global scale.
1、Hi, John, glad to have the interview with you! We know you 2 years ago, when you were the CEO of the SharesPost Digital Assets Group. how SharesPost helps people investing in private company securities?
SharesPost is a well-known secondary marketplace for private company shares. What makes it an effective marketplace is that it has aggregated high-quality supply and demand in well-known unicorns that we all know, like Airbnb. Buyers and sellers would be matched in its marketplace, making it much easier to transact whereas you would have to spend a lot of time sourcing counterparties yourself.
2、We’ve been looking at the digital securities space for a long time, and based on your observations，What is the recent development of STO in the U.S.?
Tokenization has become much more common knowledge. Over the past two years, many people have become much better educated about what digital securities are and how tokenization has enabled the creation of new types of securities. However, the adoption of STO’s has been slower than we have hoped. We’ve seen STOs of debt securities happen more frequently and that’s an area that’s slowly growing. In the meantime, other financial products such as DeFi has exploded — that’s because we’re seeing new applications of smart assets that can only be done with decentralization and tokenization.
3、What are the current challenges and breakthroughs in STO field?
The biggest challenge in security tokens has always been navigating the different regulatory frameworks from country to country. Using blockchain for STOs makes it easier for issuers to fundraise from investors globally because of the underlying technology but that advantage is completely defeated because it’s impossible to remain compliant in every single jurisdiction. In the end, it’s often just easier to issue security tokens to a small subset of jurisdictions, similar to how it was done before STOs. However, this challenge is easily solved on Avalanche because compliance can be programmed at the network layer rather than at the smart contract layer.
4、What do you think security token would do to the primary market? What role does SharesPost play here?
Security tokens are a tool for issuers to fundraise. The benefits of STOs lie in how technology streamlines a lot of the issuance process (which historically requires a lot of paperwork and manpower to process transactions). Security tokens make it a lot easier to account for transactions, record ownership, and make data available to their investors. There are a lot of cost savings for issuers who choose to issue security tokens.
Avalanche can support issuers looking to fundraise through STOs with its flexible network architecture. Issuers can use any virtual machine, use any subset of validators on the Avalanche platform, and create their own blockchain. When combined with the ability to enforce compliance and regulations at the network layer, primary issuances of STOs will be much easier to for issuers to manage and raise capital globally.
5、Many people think that the biggest problem of the digital security industry is the lack of liquidity. What do you think?
I would say it’s a combination of both a lack of liquidity and a lack of high-quality supply. Liquidity is also somewhat constrained by regulation — there are often rules that govern how long an investor needs to hold a security before selling.
Second, we would see a lot more demand if we saw a well-known company issue security tokens, like Didi in China or Airbnb in the United States. If investors knew they could buy the same kind of inventory that the best venture capital funds invest in, we would see digital securities take off.
6、We know that you founded Investery Inc., a private capital markets platform, In your opinion, will tokenization or securitization bring some changes to alternative investments?
I founded Investery because I wanted to make investing in alternative assets as easy as buying public equity. As a private investor, you had to manage workflows that took anywhere from weeks to months, process a ton of paperwork, and this was only if you could find the right investment opportunities. Investery’s mission was to make discovering, transacting, and managing these alternative investments as easy as possible in one platform.
Tokenization of alternative investments is another way to effect this vision that I have for alternative assets. Like I mentioned in question 4, tokenization would make it much easier for investors to manage their investments by having the workflows and data available on-chain.
7、Now you joined AVA Labs, can you tell us how AVA Labs work on building “an open, simple, and democratic internet of finance”?
The blockchain industry has seen what happens when a great use case takes off — from CryptoKitties to DeFi — Ethereum transactions get clogged up and gas fees skyrocket. There are limits to scaling and throughput that haven’t been addressed by any other layer-one (L1) protocols out there. Avalanche is looking to change that — we’ve combined flexible network architecture with the powerful, new Avalanche consensus protocol to truly create a platform of chains.
8、Different digital assets have different restrictions on holders. How does your platform differentiate these users?
One of the differentiating features of Avalanche is that it’s truly a platform. Issuers can create assets and blockchains based on their own needs. If they need to create different classes of token holders, they can do that. It’s completely up to the issuers how they want to use Avalanche. They have the option of using any VMs they want to use and select any validators they want to secure and manage governance of their subnet and blockchain. This flexibility enables the asset issuers to figure out the best way to restrict holders for their asset rather than be subject to constraints of the platform.
9、What do you think of the future of Decentralized Finance?
DeFi is a great use case for blockchain that is here to stay. I expect it to evolve to include new assets and funding mechanisms. Applications like Compound and Curve allow users to obtain time value for their money, which has been absent from crypto but prevalent in traditional finance. I believe other similar mechanisms from centralized finance will find their way into DeFi but redesigned for crypto.
10、Is there anything else you would like to share with Asian readers?
One of my personal goals is to make the world of alternatives more global — for example, provide investors in Asia with access to products in the US and vice versa. Avalanche is the platform that will help us reach this vision — through both the technology and the community around it. Our community is global — participants in our public sale spanned over 100 countries. We have over 90,000 people following Avalanche and Emin Gün Sirer, founder & CEO of AVA Labs, on Twitter. Our English-speaking Telegram group has over 7,000 members — this doesn’t include the region- and language-specific groups. We will continue building our community and invite everyone reading this to join Avalanche.
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