Ep 68: Harshal Madnani on DeFi, the Pros and Cons, and How Xade Finance is Doing Things Differently

Harshal Madnani, founder of Xade Finance, seeks to improve upon the security, scalability, and efficiency issues he sees with current decentralized finance protocols.

You will learn about the pros and cons of decentralized finance.

Harshal Madnani is the founder of Xade Finance and a copilot interviewed by Dr. Brook. Harshal has a background in systematic trading and became interested in decentralized finance (DeFi) when he realized its potential to replace traditional banking. Xade Finance is a company that is working to improve the DeFi space by creating protocols that are more efficient, sustainable, and secure.

In this episode, Harshal Madnani learned about the pros and cons of decentralized finance (DeFi). The main points discussed were the following: - The user experience in DeFi is very tedious and difficult to understand - There is a lack of real world adoption and utility for DeFi - The sustainability and security of DeFi is a major asset and liability.

In this episode, you will learn the following:

1. How Xade Finance is improving the user experience in decentralized finance (DeFi)

2. How Xade Finance is bringing real world utility to DeFi

3. How Xade Finance is making DeFi more efficient, sustainable, and secure

Connect with Harshal:

Website: https://www.xade.finance/

Twitter: https://twitter.com/xadefinance/

Discord: https://discord.com/invite/H7U3nB4Aa8

Free Download:

The Words of Web3 - A comprehensive glossary of terms used in the space https://mailchi.mp/9d043022b5a0/words-of-web3

Connect with me:

Instagram: https://www.instagram.com/drbrooksheehan

YouTube: https://www.youtube.com/c/DrBrookSheehan

Twitter: https://www.twitter.com/drbrooksheehan

Transcript

[Dr. Brook Sheehan]
 Hey, dr. Brook here with another epic interview with a copilot, Harshal, who is the founder of Xade Finance. And we're going to get to learn all about DEFI, the pros and cons, and how Xade Finance is doing things differently. So welcome to the show, Harshal. Glad you're here.
 
 [Harshal Madnani]
 Yeah, glad to be on this podcast as well. There. Nice to meet everyone.
 
 [Dr. Brook Sheehan]
 Yeah, thank you.
 
 [Harshal Madnani]
 Nice to meet you.
 
 [Dr. Brook Sheehan]
 Thank you. So the first question I always ask my copilots on the show is, what is your Web3 origin story? How did you get into doing something in the blockchain Web3 space?
 
 [Harshal Madnani]
 Well, my journey in Webster began like began like everyone else. I started by investing in bitcoin and ethereum. That's what got everyone here, right? But for me, investing was not really my game. And I got into this space about three years ago when I was 13. And in this space, investing was not really my game. So I got into trading. But trading was good, but I wanted to be fast, and I wanted to get out of speculation, because according to me, speculation is just educated gambling. So for me, that's why I got into systematic trading, and I introduced computer algorithms, and thus I became a quant trader in this space. And a quant trader is basically a trader who uses multiple algorithms and bots to conduct systematic trading, such as arbitrage, market making, etc. In the space, I'm still a quadrator. I was an active quantitative for about six months. I was regularly interacting with DEFI protocols and satellite exchanges. So I was always fascinated by DEFI.
 
 [Dr. Brook Sheehan]
 Okay.
 
 [Harshal Madnani]
 Because for me, what matters is efficiency. Every invention out there was created just to solve two things security and efficiency. Whether we talk about the Internet, whether we talk about electricity, they were invented to make our lives easier, to make it more efficient. So according to me, DeFi is a system which will make our financial system much more efficient. So I always believe DeFi to be the replacement of banking. That's what all of us have been told, the future of banking. The DEFI is going to replace banks. But when I started using DEFI, it was a completely different story. People were here just to make money. People were not seeing it as a real use case. Everybody was just here make money out of this to yield. Farming projects were just providing unreal yields. Unsustainable. They were having unsustainable economics. Projects did not have any real utility. And the direction in which DeFi was going, it was pathetic. It was like nowhere near the vision of replacing banks. That's when I jotted down all the points, all the problems that I faced myself in DeFi. And I decided to create a super solution which will solve all these problems DeFi and create a solution which will be DeFi's answer to traditional banks and therefore create a product which will be the absolute answer. To digital banks and it will be a direct competitor with banks and bring back DeFi to what it was originally envisioned to be. So that's how it started.
 
 [Dr. Brook Sheehan]
 Sorry, I don't mean to cut you off there. So let's talk about that. And you're using the DEFI terminology and just for those listeners out there who may not have heard that term, because you guys are new in this space and you're learning the Web3 terminology, DEFI is just a shortened way to say decentralized finance. So currently, like Harshal was saying, traditional banking, it's a very centralized mechanism of the way things are done. DEFI is turning things basically upside down on their head and shifting the way in which we do banking. But Harshal has talked about there are some cons to that, there are some problems to that, there are some good things about it. So let's talk about the pros and cons of DeFi. Let's start with what's wrong with DeFi right now.
 
 [Harshal Madnani]
 Awesome. Well, let's talk about what's wrong with DeFi. Yeah, definitely. So with DEFI, I would say there are three major problems in DeFi today. The first problem, which I think the people who use DeFi protocols, or Web3 protocols in general over here can relate to, is the user experience. The user experience in DeFi is very tedious. I'm going to share my experience. This is just an average trade I had. So it took me $10 and three wallets to just buy a token on Solana. So first I had to go to my centralized exchange, I had to buy USDC, right, and I had to pay 2% fees. That was for converting my fiat to stable coins, that was on the centralized exchange. Then I had to bring it to my MetaMask. And since the centralized exchanges at that time only supported Ethereum Arc 20 token standards, I had to pay very high gas fees, then had to bring it to my MetaMask. Then I had to use a bridge, then I had to use a bridge, I had to install phantom on Solana, and then I had to transfer it using a bridge, where I had to wait for about 40 to 50 minutes, get about three to 4% slippage. Then I got my USBC on Solana, then I got it on my phantom wallet. Then I needed to connect it to serum, I needed to connect on my serum decks, and then around with around two to 3% slippage, I wanted to buy a token and solana. And finally by losing around 15% to 17% in fees, I was finally able to buy that token on Solana. And I forgot to mention this, that I'm a Safari user and I had to install Chrome and also a mobile first user. So for me, I hardly use desktop applications. So just for exploring defy, I had to completely shift to a desktop mechanism. I had to completely start using my laptop. So that's how tedious DeFi today is all of us can relate to, because this is what usually happens, and I'm basically giving you a shortened version. Secondly, DeFi is very difficult to understand. If I'm talking about any web to application out there, I can just go to my app Store, click Install, enter my email, and boom, I can start using that app over here. I got to install a MetaMask, I got to install I got to get some native tokens, and then I had to connect my wallet. And also we need to have multiple wallets, multiple chains, right? So it's very difficult to use, it's very difficult to understand. And the UI in DeFi is made for nodes. I don't mean to be offensive, but if you see any DeFi protocol out there, go finance unit swap or any DeFi protocol, they have poor UI, which is difficult to navigate through. And lastly, I would say the biggest problem that we face today in DEFI in terms of user experience is the lack of mobile applications. There are 6 million mobile users in the world, whereas most of DeFi protocols, they only support desktop versions right now.
 
 [Dr. Brook Sheehan]
 Right?
 
 [Harshal Madnani]
 So we do need mobile first, DeFi applications second. The second major issue with DeFi is the lack of real world adoption, the lack of real world utility, and the lack of real world connections. DeFi today operates in a closed economy with no connections to the real world. You can borrow against any shit points out there, but you cannot borrow against one of the most stable and preferred assets in the world. That is real estate. You cannot borrow against a car. You cannot borrow against you cannot borrow against any hurdle asset out there. I mean, the person may not have an NFT. The person may not have any crypto because they don't have that because they don't have the means to afford a crypto or NFC, but they do have something like a house. They may have a house. They may have any real world assets that they can borrow against.
 
 [Dr. Brook Sheehan]
 Right?
 
 [Harshal Madnani]
 Secondly, real world utility, DeFi has been touted to replace banks, yet the most used banking features. I cannot take a mortgage on my house using DeFi. I cannot take an EMI on DeFi. If I want to buy something, if I want to buy the latest iPhone, I cannot do it using DeFi. I want to use the EMI feature. I cannot do it using DeFi. Lastly, real world adoption, it's very slow. If I want to go to if I want to go to my restaurant and if I want to purchase something with my stable coins, I cannot do so. There are people bringing in card services, but that's not pure DEFI. You're just basically converting your crypto to Fiat. There is no real world adoption of that. And lastly, I would say third major problem is the sustainability and security in this space. Over the past six months, we have seen billions of dollars in hacks exploits in DeFi protocols. Most DeFi protocols out there provide you unsustainable yields and provide you under your stick incentives and webcam projects in general do not have a sustainable business model.
 
 [Dr. Brook Sheehan]
 Right.
 
 [Harshal Madnani]
 If you see any exactly. If you see decent, light, decent land, there are 30 users. If you see pole cut off, they are generating $730 in revenue every week. That's pretty low numbers. They are valued at billions of dollars. But the revenue is not even hitting, I don't know, like 10,000, $100,000. Exactly. So this space is pretty unsustainable and insecure at this moment. There are other features. There are other paths to this as well. Defined protocols are undergoing. The regulation is a big issue. Another issue can be said about dows. So we see multiple fake DAOs out there. I'm going to take some famous examples. Let's talk about the tron DAO. Justinson owns more than 50% of the Tron Dow token supply, yet they call it a completely decentralized DAO luna. Everybody was against the Terra 2.0 proposal, yet Terra 20 went forward. Yeah, and there are maker dow. There are plenty of examples, but I don't want to go deeper into it. Right. So these are some of the major problems in DeFi today. And whereas if you're talking about what's good with DeFi, I mean, what are we hearing right now? There are so many constraints. So there must be something good about DeFi as well. So in DeFi, according to So DeFi so let's talk about banks, if you are dealing with a bank, so there are three major problems in banks and traditional banks and traditional finance in general. The first problem is efficiency. So the biggest error in the system is human error. Wherever there are humans, there's going to be error, there's going to be corruption, right? Yeah, exactly. Humans can lie. Humans have the ability to be corrupt. Humans have the ability to be slow. Computers do not. Humans get tired, computers do not. That's one of the reasons I got into Pontrading as well, because I've got some certain limitations, but my algorithms don't. Efficiency is one of the biggest reasons why we need DEFI. Another thing with removing humans from this equation is autonomy. Once you have a completely autonomous system, as I told you, corruption goes away. Another thing is everything like humans can be lenient at times, but you don't need a lenient system. You need a system that operates as it should. A system which is rigorous, a system which cannot break because it cannot break its own rules. That's what you get with autonomous systems. And lastly, I would say it gives you a lot of scalability as well, whereas traditional financial system can give you traditional financial system can only be limited to countries we can have a global financial system using DeFi. And lastly, if you're talking about from our perspective, you don't require tons of paperwork. You get rid of the bureaucracy. And to sum up, I would say there are three major things that DeFi is improving security, scalability, and efficiency. So these are the three major pros of DeFi finance system. As I told you, every invention was made to be a more efficient and secure to be a safer and efficient version of the predecessors. So that's why I believe DeFi will replace banking, because simply, it's just a better solution.
 
 [Dr. Brook Sheehan]
 Yeah, well, first off, you broke down a lot of different things, which I absolutely appreciate, because you did go into a lot of different cons. Like, there's a lot of different things that are wrong with DEFI currently. As it stands, in 2022, that is not going to be the future of of DEFI, as you know. You know, as we we move through and and things do get better and we'll talk about Xade Finance and how it's improving this space. But I want to hit on. So one of the things you said as a con for DeFi was security, because there are a lot of hacks and there are a lot of things that have happened even in the last I mean, you can even take it all the way back to the beginning of this year, not even within the last six months. But there's just been all kinds of crazy right. And wormholes getting all of it. But then you also said a pro of DeFi is security. So if the listeners caught that, he said a con of it was security, and a pro is security. The security currently right now with DEFI protocols is the bad negative side. But the security moving forwarded with DeFi protocols and what it can look like in the future is also the pro or the good side of it. Correct?
 
 [Harshal Madnani]
 Exactly.
 
 [Dr. Brook Sheehan]
 Okay, awesome. I was just like, listening. I was like, yes. So you are a founder of a product, or we're going to talk about a company called Xade Finance, huh?
 
 [Harshal Madnani]
 Yeah.
 
 [Dr. Brook Sheehan]
 And Xade Finance is basically doing DEFI the right way or what you would see you broke down all of what's wrong with DEFI. Xade is doing things to get rid of all of those cons. Tell us about Xade Finance and why it is a far superior product than any other DeFi protocol on the market.
 
 [Harshal Madnani]
 Got it. Okay. So mostly today, people use digital banks for the banking services. So people are used to the digital banking experience. I told you the three major problems of DeFi today. So when I was personally experiencing those problems, I decided, let's create a simple solution. You want to solve the user experience, right? So why not bring in a user experience of a digital bank, which the people are familiar with, right. So I brought in the user experience. So Xade is a super mobile application which has a user experience which is indistinguishable from the likes of the new banks and digital banks such as Revolut, Monsoon, or any digital bank provided by, let's say, the City Bank or any bank out there. So the people are familiar with the experience. We have a checking account, savings account, in essence account for the comfort of the people, which is so seamless and easy to use that even your grandma can use it.
 
 [Dr. Brook Sheehan]
 Yeah.
 
 [Harshal Madnani]
 That'S how we got the user experience. Now let's talk about the real world utility, right? So how to bring in the real world utility, why? We invent the wheel. Let's just provide what the banks provide. So we provide all the banking services. We provide payments, savings, investments, insurance, anything your bank provides, trust me, Zade will provide that as well. We provide all banking services. So what Xade took from traditional finance was the user experience and the features of a digital bank. And we also took the best of DEFI. We created three DeFi protocols which are designed specifically to replicate banking services in the most efficient, sustainable and secure manner possible. So we created three protocols remotex. It's a remote access protocol. They have consent payments all around the globe in multiple currencies with zero fees whatsoever to different mobile numbers and email addresses, which is the first indifferent right now across multiple chains, by the way, with zero slippage. Wow, that's remotex. It's live on Mainet right now. Then number two, we have got Derevx. Derevx is a derivative protocol which is the world's largest derivatives market, where you can trade more than 5000 plus markets, including stocks, crypto, commodities, forex, ETS, including stocks from the US Japanese stock. And we are adding support for European and Indian stocks pretty soon. And we have a capital efficiency system which will take all your counter trades and then hedge its position in the spot market, therefore providing you guaranteed liquidity and that's live in a private test as well. Therefore bringing worldwide market access to everyone out there. Also, it's with short selling and tenx leverage. So that's it. We have got Safex, it's a money market protocol or a lending and borrowing protocol. Right? So the biggest issue that we face today is my savings account doesn't beat inflation. I'm losing money to inflation every day. So I decided why not create a savings account which is designed specifically to beat inflation. Introducing Savage. Savage is a savings account which provides you a savings account which provides you a yield higher than your regional inflation rate. So if you live in the US, so you're going to get an inflation rate higher than the US inflation rate. If I live in India, I'm going to get a rate higher than the Indian inflation rate. And to provide this rate, we decided to create a capital efficient interest rate mechanism. Because today there are two types of money markets out there in DeFi. Number one is variable rate protocols such as Compound and Ave. They are the most used, they've got billions in liquidity. But the thing is, they are not fit for household savings. They have provided a variable rate. So, for example, if I put in some money, right, so I may get 10% today, but tomorrow I may get 1%. Not really sure. It's very unstable. It's not stable. Exactly. So that's why Anchor Protocol was created. But Anchor Protocol was created as a Ponzi scheme. It was not created to be sustainable.
 
 [Dr. Brook Sheehan]
 Oh my God.
 
 [Harshal Madnani]
 20%. Exactly. Warren Buffet provides you provided 18% per year after he he's investing for like 70 or 80 years. And Mr. Dope One provided 20% aby by just lending out against three assets. That's Mr. DOPA. So to fix that, we created a new mechanism by taking a fixed rate mechanism used by Hi Fi Yield Protocol and we combined it with a variable rate of RV and Compound to create a new interest rate mechanism known as the Sabbix Mechanism, which provides the most capital efficient interest rate models. And what we also do is since there is a lending side to it, you also are borrowing side to Saddex in the borrowing side. So the biggest problem defect today is you cannot borrow against real world assets. You can borrow against volatile crypto assets or you can borrow against NFTs. But there are multiple people out there who are just bringing in real world credit lending. They're bringing in real world asset lending. Right. So there are people who are working on this cause and we thought, like, why reinvent the wheel? Web3 is about collaboration, it's not about competition. So we partnered up with five protocols to provide lending against real world businesses and to provide loans against real world assets. So we are partnered up with five right now and by Q 120 23, we have to partner up with 30 more. Wow. Bringing in a wider access for real world asset lending, opening up a wider loan base also to real world businesses. There are multiple businesses which do not have a proper credit score. Xade will be their way.
 
 [Dr. Brook Sheehan]
 Yeah, sorry. No, that's absolutely incredible. The expansion. You saiDeFi and then going into 30 into Q One. Can you break down? How? In a traditional banking setting, most people understand, let's say you get your payroll check or you work and you get your paycheck, and your paycheck gets deposited into your bank account and it's sitting in your checking account. You have your debit card, you can go swipe it at all the retailers, or you have your credit card, those kind of things. How does that work with Xade Finance? Can you deposit fiat money like my Paycheck every single week? Can I deposit into my Xade Finance bank account? Or is it through only USDC stable coin?
 
 [Harshal Madnani]
 Currently, there are two things, actually. We also have fiat. So there are two things, as I told you, so they will also be launching card services, but we are dealing with right now. The reason being, I know about 100 products who are offering card services in DeFi right now. But it's not boosting the adoption of DeFi right now because you're just converting your crypto to fiat again.
 
 [Dr. Brook Sheehan]
 Right.
 
 [Harshal Madnani]
 So it doesn't make sense in terms of Fiat Rams. Yes, we do allow so we have two mechanisms for that. We have a Fiat Rams aggregator where we provide you the best rates between fiat and crypto, where you can convert your fiat to crypto at the best rate, or if you want, even better rates. We have introduced a new era of peer to peer fiat to crypto conversion. We have seen multiple peer to peer crypto to fiat conversions of Fat, to crypto conversions. But the issue is security. People do not like having peer to peer payments is pretty insecure because, I mean, if I may send my PR payment, but I may not receive my crypto. That's always been an issue with Binance PTO or any PTP service out there. So we decided let's add a third party to it. Third party verifier gets all these transactions. And when we have introduced this, we have a few mechanisms in which we can at least provide a more secure PTP VR to crypto conversions. So therefore, you can get rates as low as 3%, maybe 0.5%. So we have got multiple ways to on ramp your fiat to crypto.
 
 [Dr. Brook Sheehan]
 Wow.
 
 [Harshal Madnani]
 Yeah.
 
 [Dr. Brook Sheehan]
 Wow. It's very fascinating. And you said the app is getting tested currently at the time of recording. So by the time it will be released, we should be into Q One 2023. And so people can download this in any country. This is being utilized worldwide. Correct?
 
 [Harshal Madnani]
 Exactly.
 
 [Dr. Brook Sheehan]
 Okay, cool. Very cool. So is there anything else that I missed that you want to share about Xade that I maybe missed talking about or maybe something like around DEFI?
 
 [Harshal Madnani]
 I would say definitely there is one or two things I would say. The first one being I would like to share a roadmap, actually. So right now there is in a private beta, we have already launched a payments main net. It's live right now. We will be launching derevex Q 120 23 mobile application by the end of Q 120 23, q 220 23 and Q 320 23. We will introduce our savings and borrowing mechanisms. That's the roadmap for Z right now. And something about a team and something about myself as well. So what DEFI helped me explore was so the thing is, in traditional finance, in web two systems, there are multiple barriers. You need to have a college degree. You need to have this qualification. That qualifications. Right? So let me share something about myself. So, I'm a 16 year old guy, okay? My team consists of people who are drop outs. Some people have went to Ivy Leagues, some people work for institutions. So we have a very we have a team which has a very different, like, they come from different backgrounds, yet, like, some of our dropouts are more smarter than our Ivy League people, some are some, and yet we work together. Thing is, DeFi, Web3, and this new era of web will help us explore, it will help us break all the boundaries that we have today. So that's something I wanted to share about DEFI, and otherwise I would say we should use DeFi for our real world use cases, not just to make money in this space.
 
 [Dr. Brook Sheehan]
 Right?
 
 [Harshal Madnani]
 That's what matters. At the end of the day, let's not just buy tokens, let's use the products. Come on.
 
 [Dr. Brook Sheehan]
 I love that you said that, because you did say that in the beginning, and I apologize for not hitting on that because you did talk about it's, about real role use cases for this stuff, not just trying to look and watch the charts and just being like trading, trading, trading. People forget that during the time. And you probably weren't even born when this was happening in the web one days, which I was definitely coming into my high school years around at that time when everybody was talking about the big tech bubbles and everybody had a website and there was all these companies coming out and the stock market here in the United States completely crashed at some point. Because it's just like not all of these websites and tools and everything is going to work. And so now we see kind of we're living in that world right now with Web3, where everybody is having the next big company and the next big token, and they're just really trying to pump and dump, really getting people all hyped up about it and then pulling the money out. And people lose all kinds of things because there were no real foundational pieces in which the company was built on. So I appreciate you sharing that about your team. There's all kinds of college dropouts that have done massive big, huge disruptions in the world for a positive way. So that's not to say anything about you losing credibility or your team losing credibility. I think it's actually a really good thing. And I know that you've said that in a really good way. You weren't saying it as a bad thing. So that's awesome. Very awesome. I'm excited for you guys. Yeah, awesome. How can people connect with you? How can they get in touch with Xade Finance? How could they download the app? How can they yeah, well, first of.
 
 [Harshal Madnani]
 All, people can just register from our website, it's Xade Finance. Or you can just search for Xade Finance Xade Finance on Google. And the first result is Xade Finance. You can go and register for private beta or user payment screen right now, whatever you are. Private beta is full right now, but we will be opening it again around the end of this month or starting off January. Okay. Or you can join a community and I'm more than happy to give you a demo of Xade Finance personally. If you're interested to know more about finance, I would say customer support. We have probably the best customer support as a founder. I'm going to come down to help you if you require. If you have any questions about Xade Finance, just hit me up over Discord, Telegram and Telegram, as well as a Twitter link on our website so you can connect us via we would prefer Discord because we have a very strong community.
 
 [Dr. Brook Sheehan]
 That's awesome. And I will be sure to put all those links in the show notes so people have easy access to click and get right to the discord and click and get right to the website. And you made the mention that they can reach out to you directly. So that's super awesome and gracious of you to give your time like that. But thank you so much for being here. I really do appreciate the time that we got to spend together and talk about DEFI and all things Web3 and how to make this space so much better for everybody who's coming on. So thank you again.
 
 [Harshal Madnani]
 It was really great to be in the pdcast as well. I really enjoyed this time.
 
 [Dr. Brook Sheehan]
 Yeah, definitely hang out after the show. And for those of you who are on the ride with us as we pull this train into the station, you know the drill, exit to your right and we will see you on the next one.
 
 [Dr. Brook Sheehan]
 You made it. Congratulations. That wasn't so bad, was it? I hope you laughed and learned a little bit more about this Web3 universe and how simple and fun it can really be. Would you be so kind as to leave us a review and share it with your friends and family? It would mean so much to get this out to more people as we embark on the greatest transfer of wealth that has ever happened in human history. Can't wait to see you on the next one.