Pranjal Prashar join us to discuss on Instant, Permissionless Undercollateralized DeFi Lending with Paxo.
Pranjal Prashar is a Co-founder of Paxo Finance. Paxo Finance is a decentralized money market protocol that opens up investment loan options in DeFi for the global users to in digital assets via multi-pool borrowing.
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The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:01:06:07 – 00:01:21:28
Richard Carthon: Hello everyone. Welcome to another episode of Crypto Current. Your host here, Richard Carthon. And today I have a very special, special guest all the way out in Mangalore working on a really cool lending platform. We have Pranjal Prashar with Paxos finance. How are you doing today?
00:01:23:19 – 00:01:25:10
Pranjal Prashar: Thank you so much. You’re doing great.
00:01:26:18 – 00:01:35:12
Richard Carthon: Excellent. Well, happy. You can join us today as we dive more into Paxil. Before we do that, I want to learn more about you can give us a little bit of background on yourself.
00:01:37:05 – 00:01:49:01
Pranjal Prashar: Sure. So I’ve been ignored and turned up in a show business for almost ten years. I have, I think even faster was harder to run, based out of New Delhi, India
00:01:50:24 – 00:02:33:15
Pranjal Prashar: in 2015 for licenses to connect with others. And I started a fast company back in 2016. During pandemic, we had a chance to look at liberty. We started a small hedge fund where if we were experimenting with multiple defi protocol at that, when we realized that market currently there are so many protocols offering over collateralized loans. But if the antidote is there’s no borrowing for investment in crypto asset. Most of these protocols are inefficient and that’s when we realized that there is a space if we can clear it and under connection a truly permissionless, trusted protocol that can solve problems for a lot of new users in this space.
00:02:34:01 – 00:02:44:03
Pranjal Prashar: So then we started experimenting with the idea of actual be radical in the solution. And back in 2021 we started working on the development side offering.
00:02:45:21 – 00:03:22:11
Pranjal Prashar: Well, excellent. So you have a lot of background and be an entrepreneur and working in the finance world and you identified a challenge with I’m sure once defi summer hit back in uh, around, uh, you know, 2020s, you were looking at the ways that people were using collateralized loans and seeing inefficiencies and realizing that there a way to use other collateralized loans. So let’s now talk about, you know, Paxos. So it looks like the main proponent of this is being able to use under collateralized defi lending protocol.
00:03:22:13 – 00:03:26:07
Pranjal Prashar: Can you kind of just explain a little bit more of that? And what are some of the different features that are coming out?
00:03:27:24 – 00:04:00:00
Pranjal Prashar: So most of the existing known protocols in their feed, they are around there like golden on that on trucks you put in I think $400 and you get a loan officer 50 or 60 or $70 a week. And most of the users definitely got that cobalt and they buy another like on any other strategic asset. So in a way, you’re just getting blown by 60 or 70% of the real estate. Imagine if and use this is something similar to buying a home bank or buying a car.
00:04:00:02 – 00:04:35:19
Pranjal Prashar: They may have been particularly loyal to borrow $80 from the bank or from the protocol for the combined let me buy, you know and that which is I think becomes collateral. What we are doing with that, it’s the same model from lenders perspective, from a borrower side is valid to our mortgage but a car loan margin than we had able to do so that’s one connection. I mean 30% borrow from the vehicle and for the combined amount, you can buy any digital office within of the vertical and that which is I think becomes the collateral and using using that.
00:04:35:21 – 00:04:43:16
Pranjal Prashar: So you can put that could actually be used or so you can put it by staking farming in all other relevant things within ecosystem.
00:04:45:03 – 00:05:18:10
Richard Carthon: Interesting. Okay. So just so I’ll make sure I have that right, you are going through the traditional way that consumers are going and getting loans. So, for example, interest rates on homes right now are somewhere between 4.75 and up to like 6%. So if you went to a bank and you tried to go get a loan and they were telling you, well, you got to put up 40% to get 60% of a loan. A lot of people wouldn’t necessarily be able to go and do that same thing with with cars. So what you’re trying to do is propose a way in which.
00:05:19:24 – 00:05:25:24
Richard Carthon: A lot of the potential borrowers are going more of that route where they can get much lower
00:05:27:27 – 00:05:42:18
Richard Carthon: interest rates and being able to be able to get more more bang for their buck, if you will, where basically you’re able to put like, you know, 20% down, 10% down, whatever it is, and then be able to get the full amount of the loan that you’re looking for. Does that sound about right?
00:05:43:18 – 00:06:10:17
Richard Carthon: Okay. So that is correct. So if I look at the thing that people are sending borrowing for because that equivalent of gold on Martin upon trucks, the home loan model is what actually is. So there’s this, you know, analogy with the real life example, like everything around people. So even your college, a lot of investment that is that this is the equivalent of home loan income for.
00:06:11:19 – 00:06:28:12
Richard Carthon: Right. Okay. I know that. So that’s that’s a cool way that I think people can bridge this now. The the then follow up question I have for you, though, is by going that route, doesn’t that put more risk on the the pixel ecosystem? And what does Plaxo do to help hedge against that potential risk?
00:06:31:04 – 00:07:06:13
Richard Carthon: So the good or bad part is we the lending part remains similar to some of the largest investment of the existing mechanism which has changed. These are right now in normal or collateralized loans. What happens? You put the identities of larger value and that is as a collateral and a part of that is given as a lock. It gets off back to your putting a small equity and then you’re borrowing from them uncomfortable for the combined amount. Now something in these budget and that which is it becomes collateral that is locked within.
00:07:07:05 – 00:07:36:20
Richard Carthon: If you want to drive, either you need to be okay or you need to sell the position, right? So as a lender, you always have a collateral which is of higher value than the amount it has been given as as loan. So for lenders, it’s as good as collateral for for borrowers. Of course, the dynamic thing that you can do is a good value loan. People are speaking farming. Then you get money. You want it.
00:07:38:27 – 00:07:42:14
Richard Carthon: Got it. Okay. So by having that.
00:07:44:04 – 00:07:57:16
Richard Carthon: You can never take out more money than the potential loan is actually worth in the way that you are. Offsetting that is by using the native Paxos token to help with creating some of that
00:07:59:26 – 00:08:04:10
Richard Carthon: hedge against some of the downward risk that goes with taking some of these loans. Is that correct?
00:08:05:20 – 00:08:48:29
Richard Carthon: So there is basically there are, because we can look at the risk and how we can measure why. One option is not because our knowledge companies are also looking for credit scoring. So either we go ahead with that mechanism and create a system which leads to multiple debacles on technology and creativity based system. And based on that, you are given a lower rate. So that is one where we found some gaps in that method and we decided to go the other way, which is using a wild card approach so that whatever amount is being released or your own equity contribution balloon that is locked within the actual use of that place,
00:08:50:19 – 00:09:26:14
Richard Carthon: you know, which holds all the invested asset. And if you want to withdraw your own asset for the bond, you need to pay off the debt. It’s kind of a void which holds your own equity contribution and the borrowed. If you want custody of that, if you want to withdraw from back and then you live somewhere else for custody to any other wallet, you need to be on the date along with the interest value. But within that void, you can use it for seeking farming. You can also sell it and trade on multiple expenses within the void.
00:09:26:16 – 00:09:59:00
Richard Carthon: Set up whatever you want to do with those clients. You can do it. But if you want any of our site out of back of protocol, then the law needs to be clear so that by our lenders we always have access to that collateral. And if price goes down or if there is a scenario where the position needs to be liquidated, lenders money is always secured. We can always go ahead and automatically liquidate as part of the smart contract and recover the amount which has been given to the model.
00:10:00:10 – 00:10:20:15
Richard Carthon: Got it. Okay. So there’s a lot of safety nets put in place to make sure within the smart contracts that you have to protect against the downside hedge against and to make sure that someone doesn’t come and take a huge loan, get out of your protocol, get out of your ecosystem, and then there’s no way for you to rectify the challenge of.
00:10:21:10 – 00:10:33:28
Richard Carthon: Getting a loan. But the invested asset that becomes the collateral and that is locked within protocol, if you want to be great, you’ll be on the amount which, you know, if I went along with the interest.
00:10:35:18 – 00:10:49:14
Richard Carthon: Right now, that’s really cool. So that’s interesting. And one of the other things that I see on here that I think is potentially competitive is the flexible loan repayment. Can you kind of talk it through how that works?
00:10:51:00 – 00:11:21:24
Richard Carthon: But there are a lot of use cases we are seeing and the protocol we have developed. The first one is if I think there are more than $80 million in the works and a handful of them have a amount higher than the 70,000. There are almost 90, 95% less than $5,000 in their wallet aspirationally. These are the people who want to buy one because they don’t have capital. So they’re bad for that segment.
00:11:21:27 – 00:12:04:20
Richard Carthon: The protocol serves as a way to purchase a larger quantity and pay off the debt over a period of time. They say you borrow 500, you know, $500 and you pay all $100 every week or would be turned off by 60. And think of any of, you know, let’s see, what are we to be in so that we are allowing a lot of small wallet holders, people that are holding in their wallet to buy largest quantities and pay off the debt over a period of time and city off a larger portfolio so that when you and then the second you’ll get a lot of people are borrowing so that they can keep on speaking.
00:12:04:22 – 00:12:18:28
Richard Carthon: And so that’s the second segment margin trade is one of the key areas. So you know, the framework which has been proven and this is based, it would be the letter would be used in the U.S. And we believe that based on,
00:12:20:26 – 00:12:28:23
Richard Carthon: you know, millions of users in wallet that segment in something that is located throughout and we have been a lot of impact from that.
00:12:30:29 – 00:13:06:01
Richard Carthon: Yeah. It’s it’s really interesting. And I think those are getting to really get use cases for how you’re going to see more adoption come onto your platform as you’re looking at some of the ways that Paxos being utilized across your various user base right now, how do you see Paxos? Uh, the types of loans and the different types of. Things that you implement maturing over time, like how do you see different types of functionalities coming into this ecosystem in the future?
00:13:09:13 – 00:13:37:10
Richard Carthon: Hey, cryptocurrency through. This is Steve Miller and I’m the host of CC Light Show that keeps you up to date with what’s popping off in crypto. In every episode of CC Live brings you the latest news, keeps you updated on the top projects and decrypts everything you need to know to get ahead in the wild world of Web3. So if you really want to stay cryptocurrency, join Richard, Chris and I every Tuesday and Friday at 7 p.m. Eastern, only on YouTube live. So what are you waiting for? Subscribe to Cryptocurrency YouTube channel today and as always, stay cryptocurrency.
00:13:42:17 – 00:14:16:11
Pranjal Prashar: So right now we are on Polygon Realignment Polygon desk that we are yet to go live on Main and our first audit is bumpy. Then we are in process of getting our contract audited by one of the agencies right now. Based on the data we are seeing now, we are seeing on polygon testing, we believe that a lot of you move from Asian markets or Africa, some part in U.S. and Latin America. They are more aligned toward using the protocol to systematically fly like this one to be.
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00:14:16:24 – 00:15:03:09
Pranjal Prashar: So this become kind of protocol where you go and open opposition by, let’s say, one even fee of $500. So that is one thing. Also, we are getting a lot of requests to enable multiple staking and farming protocols within backfill. So these tool use this we have seen over the last couple of weeks that most of the users are inclined towards for moving forward. We believe that the same protocol can be used to buy some land in Megaworld, but from NAFTA as it is now, in terms of our protocol design, we need a liquidator and we need to systematically calculate position of each end of the borrower.
00:15:03:22 – 00:15:22:26
Pranjal Prashar: And as soon as we have the right infrastructure, we will be the protocol to enable loan in. Mike I was just like that and these loans are being discussed in real life. So imagine buying a home or buying a piece of land in Megaworld by using ten or 20%. You’re working on those mechanisms and then.
00:15:24:16 – 00:15:55:13
Richard Carthon: Got it. Okay. So so building on top of the Polygon network and currently in testing that mean that should be dropping pretty soon. And then you’re seeing this being able to potentially get to Cross-Chain in the future as well as having a platform where no matter as long as you’re within the Polygon ecosystem and looking for ways to get your loans in a couple of different markets, taxable finance will be a way to be able to utilize some of these other collateralized loans that aren’t really out there.
00:15:55:23 – 00:16:20:21
Richard Carthon: I’ve spoke to a lot of collateralized loaning institutions through the show and then just seeing what’s out in the market there. There aren’t as many other collateralized loans that are that are out there and on my radar. So I think this is a really unique opportunity and I think this is also the first that I’ve heard that is on the Polygon ecosystem. So I think that is also pretty unique that you all decided to go in this ecosystem.
00:16:23:25 – 00:16:48:23
Pranjal Prashar: That’s right. Eventually we will be my teaching will be on multiple occasions from what some of these people are like. One is going to be the first Jane Mayer really focusing on building a living community and building our significant seniors. Once we have proven that in biology team and smart in there, it’s my girlfriend getting a grasp of the.
00:16:50:20 – 00:17:27:12
Pranjal Prashar: Excellent. Well, Panjabi, you’ve already given us a lot of really good information on unpacks of finance as a kind of a off question, just as we look into the world of defi defi lending and everything else. How do you see? The world of defi and more lending, being able to continue to be brought into the mass adoption of of people that are within this space. So I think that a lot of people don’t necessarily understand what it means to be able to use your crypto as collateral, borrow against it and keep generating wealth through that tool.
00:17:28:10 – 00:17:41:25
Pranjal Prashar: But how do you think that people will begin to be educated and then be able to use something such as Paxos Finance to learn about these opportunities and then be able to participate in them in a way that feels safe?
00:17:45:00 – 00:18:33:14
Pranjal Prashar: That actually rallies Bush and is reason in. These are the questions we are also internally celebrating every every week as well as we are moving towards our law. We believe that the problem is not this technology, basic data tree and framework. So first of all, most of the protocol for doing that requires a minimum level of awareness around using compromised systems. If you if you are still a 45 year old pool user who is dealt with other technology pieces, probably he or she may not be able to figure out how to use and auditable lending protocol using my command unless given some basic, you know, editorial or something.
00:18:33:26 – 00:19:08:10
Pranjal Prashar: But I believe the technology needs to be simplified. And I know the main audience for what about smart contract. So solutions developers are that these solutions are good for technology people. But when it comes to building a solution, which is meant for everyone, our parents and siblings, our few people in our society, probably we as a technology creators have not really given up my space. Well, we believe that both as strongly as by the problem day.
00:19:08:12 – 00:19:43:05
Pranjal Prashar: I believe that answer lies in simplifying, because creating is as simple as maybe, you know, a basic interface. Right now, most of the solutions are. You know, they they like that kind of simplicity. So it required, you know, stepping out of our typical decentralized Gaddafi mine and it might start to go beyond the kind of decentralization we see in the solution. But it requires, you know, to be simplified so that our parents or grandparents can also use it.
00:19:43:21 – 00:20:20:08
Pranjal Prashar: The second part is creating, you know, simplified communication. And of course, that requires consent from the military bodies also and other activities. And then we can talk about a lot of areas because below, you know, Green Zone for most of the users, I like it, especially in India and from the developing countries, we see a lot of resistance from regulatory bodies. Often there are challenges with the new asset class, but the only way to address is by educating people, by allowing people to experiment with it globally.
00:20:20:10 – 00:20:33:07
Pranjal Prashar: And innovation may not be that good. So we have to work on both simplifying the coding and allowing people to experiment with the choice of currencies and for the way they want to engage with.
00:20:34:29 – 00:21:12:24
Pranjal Prashar: For sure. And I think that was a really good response to the question. It’s it’s an ongoing challenge as you look at product and being able to expand this to a larger audience. Of course, when you’re first building this, you have a target audience in mind. But for you to kind of grow to the scale that you want, it needs to be simple enough that anyone can be able to pick it up and use it. And I definitely think that the education piece of it be able to provide tutorials, being able to provide examples of use cases and how people could do it simply helps people to visualize like, Oh, okay, well, here is another solution, another option that I could use to.
00:21:13:28 – 00:21:35:03
Pranjal Prashar: Keep generating wealth for myself. Utilizing these these defi tools. So again, I think that’s a really good answer. I really think it’d be awesome if you are able to do that as you build that out. And I’m excited to to see what that’s going to look like. But on that same train of thought, Paxos Finance is having an IPO soon. Can you kind of speak on that a little bit?
00:21:37:06 – 00:22:03:20
Pranjal Prashar: Yes. We have plans to announce our ideas sometime in the month of May. Hopefully in the next few days we’ll have all the details. So they know we have we are in process of building our paper trail. We build our seed allotment. And we have seen a lot of interest from wealthy and private investors across the globe. But our primary role now, we are in process of finalizing dates and announcing new site.
00:22:05:22 – 00:22:39:25
Pranjal Prashar: Excellent. Well May of 2022 for those listening, especially whenever this goes into the past. So this is coming really soon. We’re excited about it. I know you are as well. So everybody be on the lookout for that. And as a follow up to that, always, as we kind of wrap up, I like to ask a couple of fun questions. And the first one that I typically ask is with all the information that you’ve been able to learn and gather while being in the crypto blockchain space, if you could impart one is one the two pieces of wisdom that you can give to yourself.
00:22:39:27 – 00:22:43:20
Pranjal Prashar: When you first started creating Paxos finance, what would you tell yourself?
00:22:46:29 – 00:23:18:23
Pranjal Prashar: That’s about it. But I think the only advice I would have given to myself one year ago was timing is important. Building our case by, you know, building the partnership is particularly important so that he made a lot of wrong decisions in terms of timing and building some early partnerships. I believe if I had to redo, probably we would have been doing some of the early pieces and differently maybe, you know, some part on.
00:23:21:00 – 00:23:35:09
Pranjal Prashar: Partnerships are only participants in the liquidity side or from cards on launching and launching it at the right time. Those are the two areas that. Probably I would have done it differently.
00:23:36:28 – 00:24:11:13
Pranjal Prashar: Got it. And I said, I think those are two pieces of advice. Of course, before getting into this face, these are things that you don’t necessarily get all the insights into and don’t necessarily know which questions to ask or what to be looking for. And now you clearly do. And for all of those who are looking to even launching their own projects that are out there, we remind this listen to Brazil and what he said. Again, make sure to keep that in mind as you are potentially bringing your products to the market. So definitely thank you for that, that insight. But as we wrap up here, what is a final thought that you want to leave with all of the listeners here today?
00:24:14:25 – 00:24:43:05
Pranjal Prashar: Credit is going to be interesting, especially from the nephew side of it. And I’m very sure that we’ll see a lot of innovation we haven’t even talked about, especially on the lending and borrowing side. I’m seeing some innovation almost every day they reopen. Let’s try out new protocols to adopt whatever we can and, you know, be open and we’ll pull out all the feedback. We have this straight up, whatever we can get our hands on.
00:24:44:16 – 00:25:01:29
Pranjal Prashar: Sure. So get your hands out there. Get. Try some different things. Try some protocols. If you are excited about what you heard today with Paxil finance, make sure you go and check that out when it comes out potential. What are some ways that people can connect with you and keep learning more about Paxil finance?
00:25:04:23 – 00:25:24:12
Pranjal Prashar: So I don’t labor on Twitter from deliberation. We are of a tight is also functional and pretty active on telegram. We’re also setting up our discord channel active on most of our channels some level on the site. Happy to drop in the site back. Product finance.
00:25:26:02 – 00:25:56:09
Pranjal Prashar: Perfect. Well, again, everyone, make sure you go and check that out. Thank you so much for spending some time with us today. We appreciate all the insights. And of course, for everyone listening. Stay cryptocurrency. Hey, Cryptoquant crew, we want to give a quick shout out to all of our faithful listeners out there. It’s been an amazing journey and we really appreciate your support throughout the years as we’ve been growing as a community. Each episode, we decided that we would start sharing some of the reviews that you were leaving for us. For today, we would like to share this review. Today’s review comes from Pod. Pod. One, two, three, four.
00:25:56:18 – 00:26:31:20
Pranjal Prashar: Explains the world of crypto in a digestible and understandable way, while still including depth that is useful for knowledgeable traders. We sincerely appreciate this review and all reviews and would like to ask that if you’re enjoying our show, please take a quick moment to go and leave a review on our podcast so that hopefully we can be highlighting your review next. Simply go to our show notes or go to our website where we have a link where you can share your review today. Hey, everyone. Hope you enjoy today’s episode. For more information on today’s episode and all of our episodes, please visit us at W WW Not crypto currency, not SEO.
00:26:31:26 – 00:27:04:28
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00:27:05:07 – 00:27:35:24
Pranjal Prashar: Acacia supports public projects exhibiting strong momentum and capacity to grow into large markets. Acacia also directly participates in limited releases such as NFT, tied to unique experiences, access or products. For more information, go to Acacia Digital that EO again, that’s Acacia Digital that I am. Are you an accredited investor looking to invest in cryptocurrency? Crescent City Capital can help. Go to Crescent City Capital. Dot com for more information. I don’t know if you’ve noticed, but the quality of our podcast each week are improving.
00:27:36:00 – 00:27:51:04
Pranjal Prashar: I can only thank my amazing producer, Andrew Ritter with the Ritter Productions, who has been putting all of this together. If you have any podcast, music or audio needs, please go to Ritter Productions dot com. That’s d r I TTR Productions dot com.
00:27:56:26 – 00:28:09:23
Pranjal Prashar: Thanks for tuning in to another episode of Crypto Crime with Richard Cardon. We’ll be back with more exciting developments from the world of blockchain and cryptocurrency next week. But until then, stay cryptocurrency.
00:28:19:08 – 00:28:21:21
Pranjal Prashar: Whitney Houston is now.
00:28:23:20 – 00:28:58:10
Pranjal Prashar: Thank you for joining us for another episode of Cryptocurrency. Just one quick reminder. Cryptocurrency is a cryptocurrency and blockchain education platform that’s bridging the gap between the curious newcomers who are just discovering the space and the thought leaders who are shaping its future. All opinions expressed by Richard Carleton, the cryptocurrency team and their guests on this show are exclusively their own opinions. You should not treat any opinion expressed by Richard. The team and their guests as a specific inducement to make a particular investment or to follow his financial advice. This show and any other crypto current production is exclusively for informational purposes.
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