Providing CeFi user experience based on DeFi spirit — Discovering how Alkemi Network — The onchain liquidity network creates a fresh financial experience for users

Question 1: It is our pleasure to welcome Brian Mahoney, CSO of Alkemi Network as a first-time guest to CryptoJ! First of all, Brian, could you give a short introduction to Alkemi Network as well as its emerging background and its future vision?

Brian Mahoney: Hi, it’s great to be here! Sure thing — Alkemi Network was co-founded by Ryan Breen (CEO), Ben Cooper (CXO), and myself (CSO) in 2018. We’re all about enabling everyone to use DeFi. We are a custody-free, decentralized liquidity network that facilitates access to a professional DeFi solution… which means that we have created the technology for institutions, exchanges, and individuals to earn compliant yields on their Ethereum-based digital assets.

Our main goal is to bring the wall of institutional capital to the DeFi table so we can help the decentralized financial ecosystem grow… and importantly, facilitate the migration of assets from the legacy financial system to a new natively-digital infrastructure — on-chain. If you haven’t seen it yet, check out this quick explainer video (https://youtu.be/WudaItEjfJI)

Question 2: When there’s a new project, many people would want to know more about the team members. Can you tell us more about your team members and any interesting stories behind the project?

Brian Mahoney: Absolutely — we have 3 co-founding members: CEO Ryan, who began building the first iterations of the project with co-founder Ben… and myself :)

Ben designed our branding, our entire UI/UX — everything you see on our website — and the whole user interface of the Alkemi Earn protocol. I brought my CeFi experience to help tailor our offering to the requirements of institutions.

After establishing the project in 2018, we gradually built out Alkemi Network adding more members to the team as we developed and honed our products. We brought on Raghu and Zak as developers, Engin as ecosystem growth lead, Elliott as an engineering manager, and more recently Max and Arthur in engagement and marketing, and Michael in operations. We put together a team of distributed professionals, filling the experience gaps across all the business activity layers we would need to launch out of stealth and join the ecosystem. And we are currently adding a couple of new developers to the team, although we haven’t publicly announced them quite yet!

Question 3: Alkemi Network has always been attracting extensive market attention. Could you share with us the funding process and partnership at present?

Brian Mahoney: Yes, of course, we closed a $4.6 million investment round back in April earlier this year, increasing our total capital raised to $6 million. We’re backed by industry-leading investors including Outlier Ventures, Techstars, ConsenSys Mesh, LedgerPrime, GSR, GBV Capital, a195 Capital, Asymmetries Funds, Shift Markets, Genblock Capital, and Autonomy Capital as well as strategic angels Joyce Yang of GCR, Jeremy Drane of Nifty’s, Quantstamp CEO Richard Ma, Ivan Brightly Former CISO Galaxy Digital, Justin Amos CEO of Lygon, Duke Kim, and Hashgraph founder, Jordan Fried.

If you haven’t had a chance yet, have a look at the ‘Alkemi Network Launches out of Stealth’ announcement that was published on Yahoo finance earlier this year: https://yhoo.it/3aI7N0O

Question 4: In your opinion, what are the similarities and differences between the CeFi market, which is mainly composed of traditional capital institutions and professional investors, and the financial activities in the DeFi field which is mainly individual investors? What is the current development status? What role does Alkemi Network play between DeFi and CeFi?

Brian Mahoney: When we talk about the similarities and distinctions between centralized and decentralized finance, we tend to think in terms of Capital, Connectivity, and Control. CeFi institutions have requirements that need to be met:

• Capital: Institutions need to be able to access suitably deep liquidity in the DeFi ecosystem.
• Connectivity: Centralized institutions are entrenched within the Web2 legacy financial infrastructure and have not yet successfully migrated to the natively digital Web3 technological offerings. They need technology to provide that level of compatibility between Web2 and Web3.
• Control: Institutions need to retain control over their allocation of assets to trusted-counterparty environments with suitable risk management and reporting mechanisms in place to meet their internal requirements.

Decentralized financial protocols have recently begun to accumulate the level of capital required for CeFi institutions to participate but the connectivity and control elements still create frictions. This is why Alkemi Network was established — to help solve the frictions for centralized financial institutions and enable them to participate within a trusted-counterparty liquidity environment, with institution-grade reporting and risk management features built for professionals. Alkemi Network is bridging the gap for CeFi institutions to access the structured products and services offered within the decentralized financial space by capturing the essence of DeFi with non-custodial, programmatic smart-contract-based protocols for institutions to interact within.

Question 5: So, Alkemi Network is building an on-chain liquidity Network by connecting CeFi to DeFi through a series of tools and products. Could you share with us how these tools work？

Brian Mahoney: Yes, the key here is understanding the access points for our flagship product, a decentralized borrowing and lending protocol called Alkemi Earn. It is available via:

1) A regular internet (Web2) browser with Web3 wallet integration including Metamask

2) An API for developers

3) An SDK bridge we developed called Alkemi Connect, which can be directly integrated as a native white-label solution for exchanges (we term this CeFi front-end, DeFi back-end).

Alkemi Earn enables institutions and individuals to earn yields on their Ethereum-based digital assets; it functions in a similar way to Aave and Compound, although our offering is differentiated by a KYC-approved digital asset liquidity pool we named ‘Verified’ alongside our detailed reporting and risk management features, which have been tailored, from the ground up, to institutional requirements. Users can apply for KYC/AML-approved allow-listing to access the protocol, deposit assets to earn interest, participate in our liquidity mining program and borrow against deposits. You can find out more about our Liquidity Mining program which is set to distribute 35% of the total ALK token supply over 4 years here: https://docs.alkemi.network/alkemi-network/liquidity-mining-program

Alkemi Network has future plans for other protocols including an AMM etc and additional features, but for the time being, Alkemi Earn is our main focus.

Question 6: We know that the flagship product of Alkemi Network is Alkemi Earn, a decentralized lending platform. Can you tell us its main functions and specific operation mechanism?

Brian Mahoney: Sure thing, the main function of Alkemi Earn is to enable everyone to become their own bank, to borrow and lend whilst custody their own funds; allocating their assets to a smart contract to generate yield. Because Alkemi Earn has both permission and permissionless pools, users can choose to undergo KYC to join the ‘Verified’ pool or connect instantly to the ‘Open’ pool for a true DeFi experience with no KYC.

The yields are determined programmatically according to supply and demand. The user earns interest on their deposited funds and also receives liquidity provider rewards in the form of ALK utility tokens, which grant them votes on protocol governance and proposals.

If you want to learn more, check out our Alkemi Network docs: https://docs.alkemi.network/alkemi-network/

Question 7: What kinds of deposits are to be supported on Alkemi Earn? And what are the differences between the deposit markets?

Brian Mahoney: Alkemi Earn currently offers borrowing and lending in four digital asset markets — ETH, wBTC and stablecoins USDC and DAI. Users can deposit any of those assets to borrow against them at a maximum 80% collateralization ratio.

Question 8: For compliance requirements, KYC/AML are required on Alkemi Network. Can you share more about the specific requirement? Will individuals pass the KYC/AML and will there be any regional restrictions?

Brian Mahoney: Yes, in order to receive allow-listing on Ethereum wallets to access the KYC-approved ‘Verified’ digital asset pool, users are required to first successfully pass KYC/AML assessment through our partnered provider, ‘KYC-Chain’. We recommend prospective users to email growth@alkemi.ai for more details. Participants are obliged to adhere to regional requirements in their local jurisdictions.

Question 9: We know that the Alkemi Earn ecosystem consists mainly of institutional traders, exchanges, custodians, individuals, etc. What are the differences between different types of user groups when using Alkemi Earn functions?

Brian Mahoney: In terms of functionality there is little that separates the individual users. Anyone can choose to undergo KYC and interact within the ‘Verified’ digital asset pool upon allow-listing. The main difference is for exchange clients that wish to integrate the Alkemi Earn yield vaults natively on their platforms; that is an alternative access point but the overall functionality remains the same. Where it becomes interesting is analyzing wallet historical behavior to assess undercollateralized borrowing possibilities, although this is something that is purely in the ideation phase at the moment.

Question 10: For value capturing, what is the tokenomics of Alkemi Network, and how do you stimulate the users to hold your tokens in the long run? What are some application scenarios of your token?

Brian Mahoney: In terms of the use case, the ALK token above all is a utility token. Its primary use is for governance, so ALK holders will be able to propose and vote on decisions to determine the future of the protocol, such as setting interest rate models and fees, selecting asset markets, and updating contracts. It’s interesting because Alkemi Network is the first decentralized liquidity network to facilitate both KYC permissioned and permissionless liquidity pools governed by one utility token (1 network, 2 pools, 1 token), so the token is very much the center of the network and will be distributed widely amongst the members of the participating community.

There are currently internal discussions on what form an on-platform future staking program might take, but the considerations of the Alkemi Network DAO governance model require significant planning and we prioritize assessment in a measured and balanced manner.

Because of the way the network has been designed, 35% of our total token supply has been allocated to liquidity rewards for network participants, so by using Alkemi Network’s protocols — such as Alkemi Earn — users become stakeholders in the network, in the ecosystem. For more information on tokenomics, the distribution of the token on a block-by-block basis to participants in Alkemi Network and the utility for the ALK token, please see our One Pager: https://bit.ly/alkonepager

Question 11: What are the following plans of Alkemi Network? When will the mainnet be launched? Any new product being launched? Will you cooperate with the projects for greater development?

Brian Mahoney: Alkemi Network has been live on the Ethereum mainnet since late 2020. You can find our roadmap here: https://alkemi.network/roadmap

We have many additional upcoming announcements planned as we head through TGE into the next growth phase. We can’t give too many details at this point, but there are new collaborative projects, product integrations, and features in progress behind the scenes with both CeFi and DeFi partners that we are very excited to share with everyone when the time is right.

Innovation in decentralized financial structured products is one of our key focuses, alongside guaranteeing the safety of our protocol and the availability of permissionless and permissioned pools for any products/protocols we launch.

We remain committed to our community and we have a lot of upcoming community events planned as well :)