Ryan Berkun on uncollateralized lending at Teller Finance

0:00i'm ashton addison from block west capital for investmentpitch media in the Crypto Coin Show and today on blockchain interviews with ryan burkin founder and ceo of teller finance ryan welcome to the show and thank you so much for taking the time thank you for having me today ashton i'm excited to be here you're very welcome let's dive into the world of decentralized finance getting

0:23loans earning interest getting more people into getting their finances straight you know in a decentralized world that has a lot of barriers to entry in the traditional world hopefully being able to get people that need capital the capital that they need without having to go through a million flaming hoops and jumps and i know that your team

0:44is working on some great solutions to help people in the decentralized finance world so let's just kick off our conversation to start ryan by getting a high level overview on teller finance what are those specific solutions you're driving into the blockchain world in finance and then we'll dive into those details yeah defy has been stuck in a world of over

1:04collateralization we've been in a place where you need 150 worth of bitcoin to borrow 100 of cash and that is both from the over collateralized platforms of defy and some of the more centralized players like a celsius or an exo or even borrowing through your bit with your bitcoin on coinbase in order to unlock this next wave of mainstream adoption of defy

1:28we need to solve use cases and demand from the borrower side that feel more like traditional finance that feel more like you're getting a personal loan based on your reputation or traditional finance that's your credit and that's what we want to bring forth to the d5 community teller operates as the back office as a limit order book where borrowers can submit requests

1:52to borrow and that could be for any type of loan request so as teller gains adoption we really are looking for those entrepreneurs that are thinking about the future of financial technology and where fintech meets defy a d5 back end saves on operational overhead it saves in capital efficiency and it actually scales your lender base those people that can fill the loan

2:15requests so the next generation of fintechs will be focused on their and borrowers providing a great experience awesome great intro rant and yeah you're right you need a lot of capital to borrow a little amount and i don't know maybe that's because they say that it's volatile as an asset for bitcoin at least you know probably more volatile on smaller assets

2:38But partially because if there's no credit history like in traditional finance where they have all your personal information they sort of see your credit card score building up and know that you're going to be able to repay the loan in crypto they don't necessarily have all that information ready at hand for somebody's first loan especially somebody that hasn't been involved in

3:00the traditional finance because they didn't have access to id or they didn't have enough money to which now they hopefully can get access in decentralized finance so there's a few things to talk about you know you talked about uncollateralization and getting people access to capital without having to put so much up or any and then a little bit about their credit and how do you

3:19monitor this so let's start with you know you mention 150 for 100 on some of these main platforms how does it work for people that are looking to get their first loan and they come to teller finance so teller will act as back-end infrastructure for many of these markets when you're thinking about getting your first loan powered by defy it actually will feel more like traditional finance

3:43as teller being that underpinning of d5 for that end user if they were to get a loan in d5 today they would be signing up for metamask they would have some type of crypto asset and they would borrow against it in tomorrow's world they would go through an experience similar to sofi or prosper or any of the major lending platforms that are lean more fintech today

4:05so they'll have a nice interface where they enter some information about themselves maybe that's personally personal identifiable information maybe that's kyc something that can bring up a reputation and likely just like in the traditional world if their credit score is being used for part of that underwriting process then their credit score can be dinged if

4:25they do default and that default because of the functions of a smart contract defaults are tracked to the moment that it happens so any type of consumer credit agency or reporter can say yes this individual defaulted and act on that information so the experience will feel a lot like a traditional fintech they'll submit their application and the final will be a

4:50button that compiles their information if that information is personally identifiable it'll either be stored privately in that financial technology itself so with that company just like it happens today or as more of zero knowledge proof infrastructure becomes available to the d5 space you could see that information actually encrypted and fully private

5:12where the user is not giving up the original information they're only showcasing the information that they want to show or maybe they prove a specific data point about themselves and that will be the flow where once they filled out the request they submit the borrowing the loan request and that's it and then they're waiting for the loan on the other side

5:34very cool good to know and i feel like there's been an ever increasing amount of options for people in decentralized finance to get access to capital how long has your team been working on teller finance and where exactly are you at right now yeah so we've been working on teller finance for about two years teller started with this dream that we could

5:57unlock on secured lending in the d5 space that we could connect the traditional world of reputation and data to smart contracts our first version we launched in may of 2020 and that connected a bank account through plaid to a smart contract the bank account allowed for some specific amount of underwriting so you could see the cash on hand that could be underwritten and that could

6:22lead to an interest rate on chain an interest rate from the smart contract users who borrowed through that application could use the funds and defy specific services so you could yield farm you could go trade very defy related however as we learned the borrowing demand is here it's present people want access to more capital not only because the opportunities are present but because

6:49people are fed up with the traditional system and they want something more transparent and they want more options so that's where we leaned into teller v2 and that's what we'll be coming out with soon where we function as this back end for any type of loan request for any type of use case and we're helping connect the entrepreneurs we'll be interfacing with

7:10the borrowers building out those sofi like applications and as a back-end limit order book we also connect to the lenders where lenders can see all the different types of loan requests that are coming through the teller protocol and underwrite the loan requests that they are familiar with and they see alpha or opportunity to underwrite very cool and i'm curious you know

7:32when i think of uncollateralized loans i think of people that don't have a lot of capital and they need to get access to capital without having to put so much up but i feel like there's also large institutions and perhaps bigger players that would like capital and they don't want to have to lock up too much capital either to get access to capital

7:50so with teller is there a mixture of you know retail investors and new new people or people that are trying to get their first loan as well as big money or are you catering to a specific audience the end borrower will be dependent on the market itself teller provides the infrastructure rails as software to enable unsecured lending markets where the opportunities flow

8:12through defy the opportunities come on to a smart contract and anyone with uscc or another stablecoin can lend to those opportunities that use case those personas are dependent on the market itself so absolutely there are going to be markets that are looking more institutional they say hey this institution has a 100 million in aum they don't want to lock

8:35up that aum but they will stake their reputation where they know that if they default their reputation will be hit and there may be compliance consequences to defaulting there will also be end consumer markets that feel more like a personal loan something more traditional where a nerd wallet or a bank rate would direct them to accessing this service

8:57and they'll be filling out a process that may feel more akin to just their credit report being utilized and i think there's going to be even wild and weird use cases that fall more web3 as we enter the space of nfts as game fight develops and becomes more mature but we're seeing players in emerging markets on game applications like actually earning a daily wage that

9:20is greater than their traditional job and those players are coming full time into the game fight ecosystem the play to earn ecosystem that can be underwritten that is a career that traditional finance will not underwrite today it'll be difficult for them to get access to a bank and a bank related loan but defy and entrepreneurs that want to serve those markets have an

9:41opening they have an opportunity and they probably have years ahead of the competition if they start now and start looking at that career landscape for these individuals definitely and yeah that's super cool and i understand you know people that are there's so many new types of jobs especially since covet people are being so creative and how they're

10:00earning a wage and you know the bank doesn't always recognize if you don't have a specific boss from this large company then you know your credit isn't as big as as them so there's a lot of imbalances there so that's great to hear they don't and if you are self-employed if you run a small business it's more difficult to get underwritten for a traditional loan a traditional

10:21loan looks at your wages your w-2 but as work has gone more remote people are less and less in that bucket of pure w-2 they have income coming from different sources and they may run their own business now and that's something new to underwrite in the in the ecosystem very cool i like it ryan and you know speaking of big players i saw that teller finance recently was

10:46there was a strategic round from some big players to capitalize teller finance further to help grow and i'm guessing to help push this v2 can you talk a little bit about that fundraising and how quickly your platform is growing yeah our strategic partners came in to help not only advise but guide how this infrastructure and the software can be

11:08integrated into the mainstream applications so as you noted franklin templeton was a part of our strategic round they are 1.4 billion trillion dollar asset manager toyota ventures joined around toyota as one of the leading car auto brands these platforms that run today's financial world are thinking about how d5 will shape the new economy the thinking about defy has that

11:34infrastructure the underpinnings for the mainstream environment of financial technology and at its core d5 saves them money but when d five evolves and it's more than just something that is capital efficient it brings transparency it democratizes access to financial services and it actually informs a user and over time we'll bring better interest rates due to

11:59increased opportunity for competition in the market so these financial players today they are taking note and they're noticing defy is not just a fad but something that brings valuable business opportunities for them and will open up new opportunities for the end user and their customers very cool well said ryan and with that round happening you mentioned in the beginning v2 you

12:25know new and improved teller finance can you give any hints into you know what's that going to look like in the coming months or in and how long that's going to take for the version 2 to come out yeah the version 2 is actively being worked on for dates we will be announcing on twitter we'll be announcing through our marketing campaigns it's coming and we actually already have

12:47pilots that we're working on in the back end that will be parlaying into these different categories of unsecured markets that we've been speaking about there are markets that do affect that have opportunities for the consumer markets that have opportunities for businesses and down the line with different types of markets both in the traditional world and in the defy world

13:07it's going to be interesting to see the different adoption cycles that these markets go through as something more traditional may have more opportunity sets in the immediacy but may have to scale in a different way that something more defy native that maybe the d5 native world doesn't have as much usage in the immediacy but can scale automatically or something in the nft

13:28space so i think adoption is going to be the key point to focus on as these markets come to fruition and we will be announcing and circling back when the v2 is live on testnet and then live on maintenance very cool i will be looking forward to those updates and i will follow the teller finance twitter for that to get the word right when it comes out

13:48now i'm i want to fast forward a little bit to i know crypto moves quickly and it's hard to predict the future but two to three years from now can you talk a little bit about where you see teller finance as well as just the uncollateralized defy space growing yeah we see teller being this embedded software this embedded infrastructure on the back end of these unsecured

14:12markets patellar also combines with the liquidity pools of urine of a trufy of a maple goldfinch these platforms in d5 today that have been centered and focused on tbl or aum in the traditional sense where they have the liquidity today to plug into these lending opportunities we see taylor software that brings forth these opportunities to the liquidity and defi today we also

14:40see teller as the backend infrastructure for entrepreneurs of tomorrow that want to launch fintechs if you look at the cost it takes cost of capital and resources to launch a financial technology application you have to run two businesses today you not only are running a software business you're running a loan order book so fintechs that are challenged with

15:00this idea that they need relationships with the bankers they need actuaries underwriters and an understanding of how to lend out to their specific market tomorrow's world of fintechs will be launching markets on d5 they'll be running one business it's just the software part of the business they won't have to worry about being that underwriter and being the lender because

15:21defy at its on its back and solves that for them they'll bring in the end users vet them verify them those end users will request a loan hopefully through the teller protocol and that's where we see teller fitting in and d5 on the other hand scales and lends out to these opportunities because that's where the liquidity is today so we see ourselves as that underpinning

15:44that software that helps run these unsecured lending markets very cool and thank you for giving that comparison i think a lot of people it's hard to understand if you're not running a fintech business how exactly it all works and the intricacies and i know it's very complex and you're dealing with a lot of other people's money as well so it's very important to be

16:04diligent about that now if there are new entrants that are looking to learn more about uncollateralized d5 or people that want to utilize teller what is the best way for them to learn more and then to get involved yeah go to our website we are teller.finance follow us on twitter we are at use teller we are posting updates with new markets that will be coming out

16:26with our test net and new additions to how we're viewing the unsecured space also we do have a podcast it is called the fortune teller podcast if you get a chance please listen in we talk about just like on this podcast how crypto goes mainstream and those use cases of how this world will be transformed then next hundred million users will come into d5

16:48incredible thank you so much ryan for coming on the show all the best with teller v2 and everything else in the near future here and i'm definitely gonna check out the podcast as well so let's follow up in the near future awesome thank you so much for having me today ashton you