Key takeaways
- NDAU is designed as an adaptive long-term store of value with demand-driven supply and monetary policy that adjusts to market conditions, differentiating it from Bitcoin's fixed supply model.
- The cryptocurrency market is transitioning from early adopter to early majority phase, requiring solutions that appeal to mainstream users rather than just technology enthusiasts.
- NDAU uses proof of stake instead of proof of work, allowing holders to earn yield on their holdings while participating in network security.
- Stable coins pegged to fiat currencies like the dollar fail as long-term stores of value because they inherit the devaluation risks of the underlying fiat currency.
- Network-based currencies should grow exponentially as their networks expand, requiring adaptive monetary policies to manage volatility while preserving growth potential.
From dot-com exits to a blockchain bet
Ashton Addison: What is your background in venture and blockchain, and how did it lead you to ndau?▶ 00:20
Rob Frasca: I'm a dot-com entrepreneur, and I used to fly jets for the Navy. In the 90s I was a student at Carnegie Mellon, where I started one of the very first financial services on the internet. It was the first commercially available stock quote server on the internet, and I sold that company to Intuit when I was 29. I later created Wisewire, one of the internet's first AI companies, and we sold that to Lycos, an early portal right behind Yahoo. I've been in tech and fintech for about 30 years. Today I run Cosmo Ventures with my partners, an early blockchain venture capital firm. We believe blockchain is going to create more value than the internet itself, because it's essentially the decentralized value layer on the internet. Almost four years ago we made a sizable investment in ndau.
Ashton: Why are you so bullish on ndau, and what is it?▶ 02:22
Rob: I always try to gauge where we are in the adoption life cycle: the visionary phase, the early adopter phase, or the early majority, when regular people jump in because they're attracted to the value. What I saw building companies through the internet is that most of the value is created when the early majority comes online, and the companies that enter then are very different from early adopters. Google was the 12th or 13th portal to enter the market. We were number two at Lycos and entered in the early adopter phase. Today, in 2021, I think crypto is on the transition from early adopter to early majority, and ndau is trying to be an early majority solution for the long-term store of value. People ask me whether that's a utility token or a stablecoin, but digital gold turns out to be the largest use case. It's the big enchilada. Bitcoin is being used that way now, as a hedge against the markets. ndau is trying to create a next-generation, adaptive currency. Its supply is demand-driven, its monetary policy adapts to the market, and it's proof of stake, so you earn a yield rather than having to mine it.
Cash is trash, in my opinion. It's being devalued.
Beyond Bitcoin and the dollar peg
Ashton: How does ndau compare with Bitcoin as a store of value?▶ 05:56
Rob: First, we're early Bitcoin buyers. We've been buying for years, we're holders, and we're not selling. But as new markets move in, you need additional stores of value beyond Bitcoin. A long-term store of value needs reduced volatility. Stablecoins are pegged to an asset like a dollar, a yen or a euro, but as a long-term store of value I wouldn't want to hold the dollar. Cash is trash, in my opinion. It's being devalued. You also want the ability to grow in value as the network grows, because all networks grow exponentially. And you want a yield that's competitive with other stores of value, which proof of stake gives you through staking. ndau is going to be volatile, not stable and flat, but it's designed to reduce that volatility while still growing as the network's value grows. The team also layered in institutional-level controls for the early majority, who won't accept losing a key or sending funds to the wrong address. ndau has multi-sig built in, and a recourse period in which you can unwind a transaction, depending on how you set it up.
Ashton: How does ndau's demand-driven supply actually work?▶ 10:27
Rob: ndau is issued on a bonding curve. It will only issue new currency if the price goes above the current issue price, and as it is issued, the price ticks up a little. Today, for instance, ndau's target or issue price is around $36, and its market price is around $32 to $33. It's trading below issue, so no new currency will be issued, because there's no demand for it and the market is stable at that level. If somebody starts buying up ndau, demand goes up, the price goes up, and once it reaches a certain level we issue more ndau to meet that demand. So it's truly demand-driven supply, which is key.
Ecosystem, exchanges and what comes next
Ashton: Where does ndau stand today in terms of exchanges, partners and adoption?▶ 12:05
Rob: We funded a company that helped build the currency, and now ndau is open source and run through the Axiom Foundation. It's its own native blockchain, built on Cosmos Tendermint with delegated proof of stake. The mainnet has been live for over two years, and there's a native wallet on iOS and Android. It launched on a small exchange, then added Bittrex Global and now Liquid. The group has signed agreements with much larger exchanges to grow liquidity. There's a group working on a wrapped ndau, and node operators are coming online. One partnership I'm particularly excited about is with Invest View, a public company in the US and a big Bitcoin miner. It owns iGenius, a network marketing firm with over 30,000 people in its affiliate network worldwide. They're now promoting ndau in countries like Egypt, France, Germany, Italy, Korea, Japan and Colombia. That's an early majority affiliate network going after new people coming into crypto. Last week, I believe, people in 37 different countries purchased and are now holding ndau in their wallets.
Ashton: What are the main priorities for growing the ndau platform over the next six months to a year?▶ 14:48
Rob: The number one goal is to increase the network of owners and users and bring ndau to the early majority. We think that's done through more and larger exchanges and greater exposure. Number two is highly localized marketing in places like Egypt, Greece, France, Korea and Colombia, with the marketing material, website and apps localized in native languages and native teams on the ground. Third is the DeFi market. We have a wrapped ndau, and we want to get it into the Ethereum marketplace, with some pretty cool reward programs around that. Finally, there's institutional acceptance, particularly around CBDCs in emerging market economies. ndau was built with a lot of institutional-level controls, so the idea is to bring that functionality to emerging markets as a potential CBDC or an alternative currency.
Blockchain is going to create more value than the internet itself, because it's essentially the decentralized value layer on the internet.
This interview has been edited for length and clarity. Recorded July 2021.
