Decentralized Lending: A Conversation With Phillip Hamnett from Chintai
The following is an interview we recently had with Phillip Hamnett, CTO of Chintai.
What's your background?
PH: My name is Phillip Hamnett, I am the CTO of a blockchain startup called Chintai that is focusing on tokenization and issuance of securities in a compliant and regulated way on blockchain. Chintai is a platform that allows issuers to create tokens and token sales in a legal and compliant way, and allows investors to access markets and opportunities that might otherwise not be available to them.
How did you get involved in blockchain?
PH: I was introduced to blockchain in the summer of 2018 by my best friend, and he convinced me to join him at Chintai. At first I assumed that blockchain was only used by criminals due to hearing bad press about Bitcoin through the mainstream media channels, but as I learned more about how it works and its potential use cases, I became convinced that it will play an important role in the future of technology.
What value does your company bring to users?
PH: Our primary value add is the ability to issue, invest in, and trade tokens in a completely compliant way. We achieve this by putting the whole life cycle of the token on-chain. From registering an account and creating a token through to taking part in a sale and secondary trading markets. By using smart contracts, we can restrict access to tokens based on jurisdiction, and automate many aspects of compliance procedures such as transaction monitoring, report generation, etc.
The focus for tokenization right now is on real estate, equities, and loans/bonds. Tokenized real estate shows great potential, due to the illiquid nature of current real estate markets and the lack of transparency or access to specific information when investing via a REIT. We will store all due diligence documents related to a tokenized real estate asset on-chain so that at any given moment you can do your own due diligence and create a real estate portfolio that suits your specific needs.
Tokenizing loans and bonds will allow a new kind of crowdsourcing to emerge for fixed returns, with great efficiency gains compared to the standard bond markets allowing for significant reductions in fees.
Due to our choice of blockchain protocol (EOSIO), we can perform all of this in a feeless, scalable way that does not suffer from a lot of the UX problems associated with other chains. For example, we can set up your blockchain account so that you can access it with a password whilst keeping it truly peer-to-peer (no need for wallets and private keys).
Where do you see your company five years from now?
PH: Five years is a long time in blockchain space, but we anticipate being a market leader in tokenization of all assets. Right now we are based in Singapore, but in 5 years we should have expanded to all major economies and be servicing an institutional move to blockchain technology.
What are the most common misconceptions you hear about decentralized lending?
PH: Perhaps the biggest misconception is the fear of risk. Whilst you obviously have to do due diligence before making any decisions regarding borrowing or lending money, smart contracts can mitigate a lot of the risks associated with lending.
Another misconception that stems specifically from DeFi is that lending or borrowing is complicated. There are specific use cases that yield farmers use in order to maximize returns that rely on complicated lending structures, but not all lending has to be like that.
What is next for decentralized lending in 2021?
PH: I think this is the year of regulated and compliant blockchains, and with that, institutional finance will be moving to blockchain as well. I anticipate a lot of new use cases for lending to arise in 2021 and as blockchain becomes more and more mature, we can expect the democratization of the financial systems to become inevitable. It will be possible for a small business to ask for a loan from a number of retail investors instead of having to go to a bank, and it will be possible to diversify your portfolio as an investor with some fixed-income returns in the form of tokenized loans.