Making DeFi idiot-proof with Kava’s gamer CEO, Brian Kerr

According to Brian Kerr, CEO of Kava Labs, the main reason decentralized finance, or DeFi, hasn’t reached the mainstream yet is that 93% of owners will never touch their own keys.

Kava is a DeFi non-ether platform that allows users to earn interest on the cryptocurrencies they own. The investors Kerr hopes to attract are those who used cheap currencies like Coinbase or Binance to buy the cryptocurrency now on the exchange. They’re afraid they’ll get fat fingers and lose their money in a wire transfer or something, he says. These investors are used to keeping their money in a bank account, but prefer to store their cryptocurrencies on a crypto platform instead of a hardware wallet.

The Kava platform connects lenders directly with borrowers, but the real challenge is not just creating a protocol on the platform, but making the integration available on the platform where people live now, he says, referring to exchanges and payment processors.

In the future, he thinks that major players like PayPal and Fidelity, who implement cryptocurrency solutions, may want to integrate with Kava’s API to offer interest income products directly to their users.

Our fundamental belief is that you should meet users where they are. I think of them as distribution centers, but they are actually retail-oriented applications that have a relationship with their customers.

Kava is already integrated with a number of platforms – including Binance, Huobi and Bitmex – not for transferring our tokens, but actually savings products, and Kava credit products are readily available on these platforms. Kerr sees even more Kava services connecting to their platforms. Basically, we can extend any application that stores cryptocurrencies to include the custody of Bitcoin, XRP or Ethereum, or whatever, with financial services to leverage that capital.

The idea is that a user who owns a currency like bitcoin simply clicks on the product they are interested in and uses the slider to set the amount of BTC they want to receive interest on. The user experience is simple, Kerr says, because they won’t even see the user interface or the Kava website. Everything is done in the back.

I think it’s moving in that direction, that people don’t need to know what DeFi is.

Gok Shrine

Kerr, now 32, describes a difficult childhood with his grandmother in an ethnically mixed working-class neighborhood where all the neighbors were involved in various kinds of drugs, especially hard drugs like methamphetamine and heroin. It was very different from the middle-income white suburban America that most people think of, he recalled, adding that for as long as he can remember, he felt out of place as one of the few white people at his school.

It was also a scary environment. Every day there were big fights at lunch, and the police would come with shields, he recalls of his underfunded high school, which resembled a prison – full of gangs and often unable to teach. In the background, he was drawn to a group of students who liked to play video games. That’s how he got into acting, which has defined much of his career.

The competitive environment of college, where he went to work in software engineering, was an unexpected challenge, because in high school I was able to get by without any real direction or good habits. He gave up.

He quickly went back to school and was eventually admitted to San Francisco State University in 2007, where he chose business because he saw it as a generalist degree for an uncertain future. I changed my major eight times, he recalls.

After graduating in 2011, he was hired by Sierra Circuits, a circuit board manufacturer, where he worked as a sales engineer with engineers from Boeing and Raytheon on their prototypes for things that would go into space. Although he gained confidence in working with technology, he soon dreamed of leaving the family business and going into entrepreneurship, where he could be his own boss.

All the executives and all the PhDs were like family, and everyone else was treated almost like second-class citizens. This was my first training on how companies should not be run. I also realized that I needed to do my own thing.

When he left the company, Kerr was at a crossroads. On the one hand, there was a well-paying job at chipmaker Nvidia. It was kind of a fast track to the position of marketing manager, a great opportunity for my level of life and experience, he says, adding that the position would have focused on the company’s core product lines.

The other option was to move to London and work for Fnatic, a three-person startup, to fulfill my entrepreneurial desires by turning this team of Esports enthusiasts into something real. The idea was to build Beats by Dre, but for gaming hardware, with famous players and influencers helping to design things like keyboards, headsets and mice.

I had two choices. One was a very solid job at a company where I was able to learn a lot about how a large corporation works – this will be very helpful for my career. On the other hand, it was a rather dubious possibility.

He asked several friends in executive positions at different companies what they would do, and they all felt that Nvidia was the obvious choice. Zero person said they were taking on the role of Fnatic and trying to build material. That’s ridiculous, they said. He decided not to take the advice and moved to London. The work also took her to Gothenburg, Sweden, before she returned to the San Francisco Bay Area in 2015.

At Fnatic, Kerr helped build a team from three to more than 100 employees and learned to run an international company with production in Asia and partnerships with players around the world. The company has developed by reaching the market through means such as Twitch, a streaming platform sold to gamers. In the past, an esports team was no more than a hobby of friends and family members who could occasionally scrape together money for sponsorship – and still : Suddenly these teams are worth hundreds of millions of dollars, and the stakes are huge, with the media rights and everything else.

Call barring

In San Francisco, Kerr met Alexander Kokhanovsky, the founder of Russian Airport, which had just opened a decentralized marketplace for DMarket gaming products. Owning digital assets like character skins or gold for multiplayer games like World of Warcraft seemed natural and intuitive to Kerr, so he joined the project as a consultant.

I couldn’t believe these guys were able to raise $20 million in about three weeks with an effective PowerPoint presentation, because that was really hard to do for a serious company like mine, with real revenues in the millions of dollars.

DMarket’s success in raising investment capital was a wake-up call for Kerr, forcing him to take a closer look at this growing sector.

I had the opportunity to expand my network and meet people like Joseph Lubin, executives at Ripple and others, all within four weeks of my decision to get into cryptocurrencies, and it has remained that way ever since, he recalls.

I just knew that I was going to spend at least the next five to ten years of my life in this industry, because there were going to be so many disruptive technologies involved. It was just the best chance, for me and then for the world.

Non-Ethereum DeFi

Kerr says his co-founders of Kava came from the poker world and were respected for the idea of censorship-proof money, as online poker sites were often shut down by regulators because of gambling laws. When that happened, all the companies’ money was seized, which meant my co-founders’ money was stuck unattainable for years. They were unable to collect interest on this amount. He’s just stuck in limbo. As a result, much of the online gambling industry has turned to cryptocurrencies.

Mr. Kerr is puzzled by the different ways cryptocurrencies appeal to people. Whether it’s poker, a game, or a business or school appointment, there are many ways to block the channel. I happen to be leaning heavily towards the game.

Kava’s lab actually began with a very different mission, he explains. We founded Kava Labs with the belief that cross-border e-money payments would be a game changer. Trading volume in the FX market is one of the largest in the world, so the TAM [total addressable market] seemed large enough to be affected.

The company’s initial goal led the team to partner with Ripple to accelerate transactions. Solutions he has worked on include implementing depositless wallets on the Lightning Network with Ethereum payment channels, and Dai payment channels with Dai stablecoins, he says.

Between 2017 and 2019, the cryptocurrency business was not in the $1 billion range, but still in the $100 million range, Kerr said, explaining that the business was not scalable at that volume. With the team expected to be $500,000 in the red with equity in June 2019, a change in direction was necessary.

We then vetted all our options and gathered a huge amount of knowledge about the different blockchains – how they work, what the requirements would be to make them work together.

They decided to build Kava as a platform to access deFi’s services without depending on Ethereum. The first step was a blog post, after which the project raised a total of $8 million in a matter of weeks.

In October 2019, Binance Launchpad held a KAVA tokensale and bird drop, which Kerr said led to widespread distribution of tokens, widely seen as a sign of investor confidence. Since we have been using the Kawa blockchain, things have been running smoothly, which will happen next month.

Despite the hype, the first minimum viable product won’t be there until June 2020. This product was a platform that offered secured loans, first for coins owned by Binance, and then expanded to bitcoin, XRP and others.

Kava has grown significantly since its launch, and Kerr said the platform now has about $300 million in deposits and $80 million in outstanding loans between accounts of about a quarter of a million dollars.

I would expect it to grow more, but it is the largest non-Ethereum DeFi platform and app to date. I’m very proud of that, and I think in some ways it will only continue to evolve as we add more financial assets and services.

Despite the obvious success, the road has not been easy. I’ve always suffered from imposter syndrome, he says, the feeling that I don’t deserve my accomplishments or my position. The fact that the industry is rife with scams and hacks certainly adds to the pressure, and many bitcoin maximalists and non-coiner types have been known to mock the DeFi industry a bit more than they would the Ponzi scheme. The high return, paradoxically, may also discourage users who find the capabilities of the DeFi too good to be true.

Kerr has high hopes for Kava’s new feature, a hard-to-protect money market that will launch on the 31st. March was released, allowing users to earn interest on bitcoins. It will still be very early, that’s all I can say, but it will probably start in the 20%+ annual return range, he says confidently. However, he does not expect such high returns due to increasing competition among DeFi platforms as borrowers look for the lowest interest rates.

I think over time, AlleFi’s services will become commodities. Anything can fall in price if people are chasing crops.

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