Developing and managing blockchain innovation

In the second edition of DQDeepTech, panelists Vivekdeep Gupta, Kaavya Prasad and Prashanth Swaminathan discussed application of blockchain in governance projects, enterprise, and medium- and long- term changes to be witnessed due to it. 

Vivekdeep Gupta, Country Manager, R3, talked about how blockchain is used for supply chain needs. One big use case of enterprise blockchain identified and being used at scale has been around supply chain finance, logistics, and trade finance. Blockchain solves the information asymmetry that exists among various parties. It also solves the archaic processes, especially in trade finance. There are multiple global and local cases where blockchain has added value. 

R3 runs two global networks. One is called Contour, focused on global letters of credit. The other is Marco Polo, focused on open accounts space. Domestically, there are a number of banks focused on domestic trade finance. Cycle time for processing a letter of credit in India was about 5-8 weeks. We have reduced that by 75% using blockchain-enabled technologies. Blockchain has found its sweet spot. It allows transparency and visibility for multiple parties over a single trade finance app. It also makes the lives of big corporates and SMEs much easier.

Prashanth Swaminathan, Partner and Head of Institutional Business, Woodstock Fund, said there are trends in public domain. One is convergence, where the underlying tech is consolidating. We foresee space for public blockchains to be here. With the bedrock of blockchain, there will be emerging technologies on top of it. This could be AI/ML, VR, etc. We are identifying layers of blockchain and middleware that facilitate creation of futuristic apps. Woodstock is an emerging technology investment firm, investing in early and growth stage distributed ledger technology (DLT) startups and companies.

Second theme is financialization. It is an extension of the DeFi langugge. In DeFi, over last 12-18 months, we have seen that proliferate and create lot of efficiencies. We will see lot more merging of DeFi with traditional finance. We will see supply coming into DeFi, at a global level. It will merge with demand from rea-life use cases. We will have access to supply of such liquidity. We are looking to build on these mergers, and solving real-world use cases.

Third aspect is virtualization. There is a small subset called NFTs or non-fungible tokens. They will expand bigger, into a virtual world. We will be spending lot more time in digital and virtual spaces. We will start assigning more and more value to the digital representations of physical forms, be it our avatars, and collectibles. We are identifying the right themes solving the right problems for getting to the vision over the next decade.

Regarding metaverse, appreciation for anything digital has gone through the roof in this lockdown over the last two years. E-commerce, social media, etc., have made lives easier during the lockdowns. Anything digital has been lapped up by the masses. Product market fit for digital revolution has accelerated massively over the last 18 months. The vision has shortened from 10-20-year period to 5-8 years. We will see lot of expenditures in digital space. VR sets, gaming sets, concert experiences, etc., will go through the roof over the next five years. We should see tangible metaverse developing. Facebook has the Oculus VR headset. It automatically exposes their metaverse to 3 billion people. More and more people will adopt some version of the metaverse. It will trickle down to many people adopting metaverse in decentralized world.

Kaavya Prasad, Co-founder and COO, Lumos Labs, said Telangana government has been very receptive to blockchain. They are one of the first state governments to implement blockchain in real-world solutions. They have used land registry in the state and put it on blockchain. They are looking for solutions in the public sector. They look at supply chain, healthcare, insure-tech, etc. It is secure, and they are ready to support blockchain. They are also looking at a blockchain district in Telangana. They are looking to make Telangana the blockchain hub of India. They want to bring the feel of a crypto valley in India, and get a community of startups, developers, ecosystem enablers, VCs, etc.

We run multiple outward-facing programs with Telangana government. We also try and teach about the technology and get people to look at it more seriously. The accelerators have also tried to pilot with some projects. Three starts had got together with accelerators. Several more should come on board over the coming years.

Tier 2 cities are undergoing transformation. Lumos Labs runs innovation programs. We try to get to the grassroots, and get innovators from tier-2 and tier-3 cities and colleges to come forward, innovate, and find new ways of solving a problem. We have seen dominant growth in programs we run. We ran a hackathon with a company, Protocol Labs. Winners of the hackathon were from tier-2 and tier-3 cities. Students from here have it in them to prove themselves. Education programs are also being run to upskill developers.

About NFTs and how easy it would be for enterprises to adopt them, Vivekdeep Gupta, R3, said the ease of adopting blockchain is getting easier over the years. There is 95-97 percent reduction in effort for blockchains today, than five years ago. The same thing will happen with NFTs. Protocols are also geared up towards NFTs coming in. There are NFT platforms coming up to make adoption easier. Adoption and deployment is going to be much more easier. With NFTs, the biggest challenge and opportunity is to figure out where enterprises play in the space. Right now, people are looking at it as collectibles and fund-raising activities. Manufacturing and design elements could also become NFTs. NFT and 3D printing could bring about change in the enterprise space. There are exciting times ahead.

Prashanth Swaminathan, Woodstock Fund, noted that there are still some barriers to funding. The adoption among users, enterprise is at an all-time high for blockchain. We are cautious about diligence that needs to be deep and precise. Whoever wants to build in this space around DeFi, NFTs, technology layers, etc., they are doing it as they want to solve the right problems. We need to go about carefully how we get to invest in the projects. Certain companies may want to push this a lot faster as there is lot of capital is lying around. We need to have a process- and thesis-driven approach. It applies to any startup, enterprise, etc., and the need to be patient. We have a clear vision about this space and where it is going. We are in it for the right reasons.

He gave examples that technology is a panacea or solution for all the problems of the world. We can decentralize Uber, but we also need to look at whether technology and company are ready. If an app is not ready, that is a clear red flag. The team working should be mindful of how robust is the infrastructure. We need to create network apps. Another red flag can be trying to create a problem, and then solve it. The team may not have a background of pedigree in the space. They would need to do research. There is Web 3.0, and a lot of people are working in that space. You need to think of this space in the long-term. We try to help people with Web 3.0 and try to ensure they stay close to that. We can handhold and guide them in the right way, so they are prepared when they try to solve some problems.