Web3 Evolution with Mark Leahy, Chief Business Officer of LedgerEdge

Speaker A: What are common misconceptions about Web3? What lessons can we learn from crypto as Web3 evolves? Trends that will shape the Web3 landscape in the next few years. We'll cover all this and more in this conversation with Mark Leahy, founder and CEO of Worthy Advisors.

Speaker B: Welcome to Web3 Opportunities podcast hosted by Kelvin Wong, creator of JP JP Morgan Strategic Solutions Group. If you come from a non technical background and want to learn how blockchain technologies disrupt industries and want to discover investment and career opportunities in the crypto economy, you've come to the right place. In each episode, Calvin chats with some of the most innovative founders, investors and thought leaders in blockchain and crypto space. This podcast is for informational purposes only and nothing said on the podcast should be taken as financial advice. Now let's dive in.

Speaker A: Hi everyone, I'm um, Kelvin Wong. My guest today is Mark Leahy, founder and CEO of Worthy Advisors. Mark, thank you for being here and welcome.

Speaker C: Thanks Calvin. Very nice of you to uh, invite me on today.

Speaker A: Mark, please tell us a bit about your background and your journey into crypto.

Speaker C: Uh, so I'm a finance guy, started in a small ah, company called HSBC in the early 90s. Um, I say small because nobody, when I left Ireland, um, to go to Hong Kong to join hsbc, people had to kind of figure out who the hell they were and look it up, um, and have been in that space for 25 years, um, focusing on what's known as FICC, fixed income currencies and commodities. That's really kind of been the vertical that I focused on, um, hsbc, Deutsche Nomura, ubs, uh, would be for the kind of larger, most well known companies I've worked for over the time. And having decided to kind of pack that all up um, after the GFC or not long after the gfc, uh, I wanted to remain kind of use that skill set in something more interesting um, and challenge myself. So was lucky enough to be involved with a company that's um, running successfully here in Singapore called Bond Evalu or Bond Blocks. I was an early advisor, uh, an investor in that company back in, I think by 2015, 16 or so, seems like a long time ago, um, so that was really my first step into uh, the fintech and the blockchain world. So that company was looking to um, use a phrase, democratize access to fixed income markets, um, using DLT technology as a way to, through tokenization to provide access to uh, the smaller guy or what's commonly known as retail, um, through DLT to fixed income assets. Fixed income is available to almost everybody at some level in almost every market. Um, in principle from a legal and reg perspective, but it's very hard to actually transact. Um, it's very hard to get access to pricing, to know where things are trading. Um, and the margin that gets charged to players in that space to particularly the smaller guys in that space, um, tends to be very significant. So that was my first entry into the fintech world and obviously given the fact that the tech stack was blockchain, um, to get direct exposure to that world as well. But to be very clear, it absolutely wasn't crypto. I found crypto absolutely terrifying um, back in those days, uh, and I would say only over the last two or three years have really come to appreciate some of the things that are happening all the way deep into blockchain, which is really where the crypto world sits.

Speaker A: Mhm. You come from a traditional finance. What are key challenges in bridging TRACFI and defi?

Speaker C: That's ah, a, that's a really good question. Um, and it's certainly you know, part of what I try and uh, you know, focus on and, and the problems we try and solve in the, in the business I run is exactly that. So if you think of, think of how successful the whole crypto world has been and then everything that's kind of happened around that, whether that's um, you know, the remarkable success of the kind of the NFT space and some of the businesses that operate there, um, some of the blockchain based software and solutions providers that have also come up right in that space, the number of businesses in the traditional world, not just finance, who are now using or trying to use or thinking about using um, DLT or blockchain as a way to solve kind of real world problems, um, that's been, you would never, people in the traditional finance world or the traditional world would never have thought that possible as little as five years ago. But the crypto world's been built up largely in isolation. One of the things that's still a feature I think of that space is ah, almost an ideology, um, or a faith that that system, economic system built on blockchain is the future of the world. And in other words everything we've been doing for the last few centuries is going to fold somehow into um, the system that's been built around crypto. So I think that ideology has kept those players up until recently quite happily separate. Um, it's also meant that on the traditional finance side it's probably been a little intimidating to say the least for traditional finance institutions to kind of connect because you really have a very different worldview or you have had a very different worldview between the larger players in the crypto and blockchain world and the rest of the economic system. So that is starting to change. Um, you've certainly seen over the course of the last year or so some of the challenges that the crypto and blockchain world has had despite its kind of economic and financial success and the amount of wealth that's built there. Um, you started to see some weaknesses in that structure and obviously some of the exchange problems that are going on currently and have happened earlier in the year, um, are indications of that. And I think those problems, a few that I see that I try and focus on are things like segregation of client assets, um, or kind of and, or custody, um, and then risk management or asset liability management. Those things seem to exist to a lesser degree than they need to be for that system, the crypto and blockchain world, to function effectively, um, and safely and to achieve its potential. Therefore, um, so you're starting to see a push from that world. Looking back into the traditional finance world, what can we learn on m the other side? I don't think there's a financial institution left in the world. I mean that's a punchy thing to say. I'd be very surprised if there are many left who are not at this point at least trying to understand this space and many who are now looking at collaborating or looking at projects or testing out what can blockchain do for my business. And then of course beyond that, you have certain players who've jumped the fence and are fully committed to implementing at scale, enterprise level solutions, um, because they believe that the future of finance is going to be built around, if not built entirely upon blockchain. It's going to be built that evolution is going to be built around what's happening in the blockchain world. So you've got at last this has really happened, I think only in the last couple of years. Um, and with increasing pressure, both sides kind of looking to try and, to try and meet in the middle, um, and appreciating that they've got something to learn, to learn from each other. On the crypto side, that ideology, I still see it quite strongly. You and I were at a digital last conference about a month back. The Singapore fintech Festival was on last week and you can still see there's a number of crypto players kind of saying, well, the Whole world's going to fall apart and we'll be the replacement system. Um, my view is more centrist around that. Uh, I think the true potential of blockchain is going to be achieved by taking the best of what's been happening in the crypto world, and particularly the talent that is attracted, um, and then merging that in the middle with some of the more innovative institutions, the braver institutions that exist in the traditional finance world.

Speaker A: Yep, I agree with that. Now web3 got talked a lot by various different people, uh, in different areas and they mean different things to different people. What's uh, your definition of Web3, Mark?

Speaker C: I was going to try and ask you the question. Um, the fact that there isn't a definition, um, it's not necessarily problematic. Every new thing evolves and then at some point you'll go into Wikipedia or Investopedia and the definition will be there m and we'll all kind of agree with it. We're certainly not there. At a simple level. I simply think web3 is the evolution of everything that happens on the Internet. Um, you know, I'm not saying anything new here. I think Web 1.0 was kind of read only. Web 2.0 is kind of, you know, read, write. Um, and this obviously, you know, transform the way we do many, many, many things. Um, and then web3 is the next level of that. Right. Um, I mean if you think of it in the kind of comms world, 3G was something pretty special, just like web 2.0 was. 4G was kind of an enhancement to that. Didn't change things dramatically. Just a lot more functionality, a lot more bandwidth came into the space that allowed more things to happen. And then 5G. 5G rollout I think has been almost kind of seamless. Right. Um, it hasn't impacted lives to the same degree as let's say 3G did. So whether 3.0 is absolutely revolutionary and transformative, which I think the crypto world sees or would wish for, um, or whether it's simply a further evolution of the way um, the Internet works today, I think remains to be seen. I think the things that are interesting, um, and the decentralized philosophy that exists in the crypto blockchain world could be the ability for individuals to have greater control and ownership and potentially monetization of their Internet profile. Um, mhm. That part looks interesting to me. Again, I can't, I don't think there's anyone left who has some concerns about what happens with their Internet profile today. We're all keenly aware that we're getting monetized kind of left and right. Um M. Most of us hope that we're not being uh, exploited beyond that. Um, many of us believe that we probably are. So if Web 3.0 can allow individuals control over their data and blockchain certainly provides a solution for that, that doesn't really exist easily with existing technology. Um, I think that's a very positive development. To me the definition of Web 3.0 is taking the middleman out of the Internet.

Speaker A: Mhm.

Speaker C: And I don't think you're going to be able to take all middlemen out of everything. The question is whether that middleman is more decentralized or decentralized. And I say that like more decentralized than not to pick on meta but Facebook. Um, that would be really valuable at many levels both in terms of developing new economic models, allowing people, whether it's content creators for example, um, easier ways to monetize what they do without having to pay fees, kind of having that leakage um, that exists currently on platforms by Platform two platform operators. Um, so I think that could be really valuable. And then knowing where your data is and what's happening with it, um, and making decisions about whether or not you want to monetize it and how you want to monetize it, that to me seems um. I don't want to be naive about it but yeah pretty one sided as ah, a positive outcome.

Speaker A: Mhm.

Speaker C: Now you said it was uncertain and kind of controversial and just thinking about what people have said about it. One of the original statements around it, I think back in about 2014 um, was from the Polkadot founder. He said something pretty simple. He just said decentralized online ecosystem um, based on blockchain doesn't sound too controversial. Um, I think if you're in the crypto world and you're really vested in that ideology that exists with certain large institutions in the crypto world, um, you're hoping and pushing the agenda that Web3 will actually be an Internet where crypto is the only currency. Um. Now I think we all talk our book to some degree but that's kind of what I see happening with that messaging around Web3. Web3 is going to be great. Everybody needs to own crypto, trade crypto, get involved in the crypto world um, to make that happen. And I don't think that part is true. Digital tokens for sure. Digital currencies almost certainly. Um, but there are plenty of forms of digital value that move around outside the crypto world that could also function quite effectively. Um, and would allow these positive outcomes for things like creators that we just spoke about.

Speaker A: Yeah, so what that common misconceptions about Web3.

Speaker C: I think this idea that it's going to be the operating system for the Internet, that everything we do, that everything we do today is going to somehow kind of go away. Um, there was another quote, I don't know if it was also from government, I can't remember. But anyway, the example was Uber is a platform. You've got all of these gig economy drivers sitting behind Uber. Wouldn't it be great if those drivers were the business? Um, and whether that's, uh, a decentralized, um, organization or whatever kind of structure you want to put around that, um, it sounded pretty communist to me. Uh, it sounded like a real stretch. Uber itself came into being through kind of capitalist drives of the founder. Um, so that just seems too big, kind of an economic, um, and structural leap that all of the existing structures around the economy are somehow going to be represented all on blockchain, which will be various blockchains will collectively be the new Internet. Um, and that we're all using that for kind of everything that we do, that seems too revolutionary to me. And I think there's a lot that can be achieved through evolution, the evolution of Web2 into something much better. Um, but I think we stop short of revolution.

Speaker A: Yeah. And what lessons can we learn from crypto as web3 evolves,

Speaker C: that not everything that's happened pre crypto is rubbish. And, uh, why do I say that? Because I hear that a lot from, you know, from certain constituents within the crypto world. And, uh, as we spoke about earlier on, segregation of client assets from the business, that is adding value to client assets by trading them or whatever it's doing. Crypto exchange being an example. Segregation of client assets was a really good learning experience in traditional finance over decades and centuries. And we saw it many, many times. Even this century. We have seen problems with segregation of client assets. The Madoff scandal was a problem with segregation of client assets, amongst many other things. Um, and again, that's point out, traditional finance is imperfect. We're still fixing things and we'll continue to do so. The system will always need to be improved and optimized. Uh, but there's been a, by throwing kind of scrapping traditional finance entirely, crypto evolved and is doing some, has done some amazing. It's remarkable what crypto has achieved to make that sustainable, safe, valuable, and to achieve its potential in the long term. I think there are certain things within traditional finance that crypto can learn from. And those things I hope are uh, the fundamental building blocks around anything that happens in the kind of web3defi world. So segregation of client assets. Um, good. Proper risk management capacities and talents and systems and processes. Sorry, it sounds super boring, but there we go. Um, yeah, those are some of the aspects that I think custody those, those real building blocks.

Speaker A: These building blocks are certainly, uh, very important. And who do you think will be the winners in the web 3 evolution?

Speaker C: Interesting. Uh, hard to name names. It's too early to say. You know, even the definitions too fuzzy at the moment. Um, I think Elon Musk and Jack Dorsey have both said, you know, they've been pretty critical of the whole, uh, kind of Web three as a concept. I think they've described it as a venture capital plaything or some form of a paragraph. But if we think about it in the context of what I described earlier on, an evolution of Web 2.0 that uses the good things that we've learned in the crypto and blockchain world better, um, I think it's going to be those institutions that are able to bridge the traditional world, traditional finance world perhaps. Um, and everything that's happening in the blockchain crypto world. Not to say that this is Web three at all, but if you look at the evolution of stablecoins that tie up between Circle and BlackRock, which was announced recently, looks like a really smart example of what I'm talking about. Um, BlackRock's clearly been paying close attention to everything in crypto and blockchain for a while. Uh, and I don't know who started that conversation but, but if you're in traditional finance, you can see the weakness in the stablecoin structure, which is basically all of the assets behind the stablecoin sit within the company that issues the coin. They're not segregated in any way. Um, and you don't really have a lot of visibility on the underlying portfolio. Someone like BlackRock can provide a solution for that. And you've seen Circle look to back their coin, um, with what's effectively a money market fund. So there's an example of you could end up with possibly not to endorse that particular project. Um, but to me it looks like probably the best looking stablecoin that's out there pretty quickly. And my understanding is that that structure gets set up in pretty short order over the next couple of months. Um, so I think it's likely to be things like that where you have joint ventures or joint ventures or collaborations, um, that bring the Best of what we've learned so far as a species in the various industries that we've established and operate. Um, and then the very best of what's happening in the crypto world and we blend those together, I think the winners come out of that space. As opposed to the kind of old world versus new world ideological battle that some I think position this as.

Speaker A: Yeah, it makes a lot of sense. Now Mark, tell us a bit about worthy advices. What problems is worthy solving?

Speaker C: So Verde evolved, um, really from what we're talking about, which was um, having worked in a number of traditional finance institutions, um, and then helped a, uh, couple of them look to establish initial um, PoCs around blockchain, uh, use cases that might be relevant to their business. And seeing the struggle with, whether it's management or kind of the bureaucracy or the incentive structures or the board in some of these institutions to find ways to explore and ultimately see opportunities and monetize those opportunities. I've seen that challenge within those institutions. And then on the other side, what I see is a really interesting visionary. Uh, businesses that started from projects in the blockchain world, particularly around digital assets, um, that have done well. Um, you know, they've grown their businesses, they've got a really good vision, they've got a great team, they've got good technology. Um, but scale has remained elusive so far. Um, so they've got clients, that's traffic on. These systems are doing well. Um, but they're not, they're not where they need. You know, they're still a long way from where they want to be. And being able to bridge the gaps between these two constituents, um, that was what I found. I found, you know, before there were clients, there were contacts and associates and ex colleagues and business partners. Um, really just asking me for views around things and it seemed sensible to set up a business around that. Um, so hence Verde evolved um, to allow me to do that, you know, kind of as a, as an actual thing rather than um, informally. That makes sense.

Speaker A: Mhm. What are trends that will shape the Web3 landscape in the next few years? Mark,

Speaker C: that's a super, really good question and very broad. Um, so on the challenging side, the ructions in crypto, uh, again not to shine too bright a light on that, but the current challenges that crypto is having need to eventuate and find some kind of a floor. Um, I do think even though you can separate entirely blockchain as a system, as a m method to solve real world problems, that is bigger, better, faster, stronger in many ways. Um, it is still heavily influenced by, affected by um, what's happening in the crypto world. So if the crypto world really melts down, it is going to impact negatively I think the perception of blockchain at least for a little while. Uh, conversely, conversely. So yeah, that evolution, the kind of ructions in crypto, um, sometimes get conflated with blockchain. Looks like blockchain has a problem, blockchain doesn't have a problem at all. Certain crypto institutions have problems. Um, that's, you know, it may take a little time for that to kind of play out and work through M. So I think that's one aspect that we need to pay attention to. And actually it will be very good to see traditional, traditional institutions, traditional finance institutions and we may see that as things play out in crypto, um, step into, to try and become more active in that world, um, so that they can bring some of those practices as quite often regulated entities with all of the baggage, but also all of the good things that can happen around that um, to that world. So that's one aspect, um, the push, the growing understanding of what's happening with our data as individuals. Uh, I do think that trend, I think we become more and more aware of the extent to which our data is out there, the extent to which it's being monetized, um, you know, not necessarily not in our favor, um, and the extent to which it's being used for purposes that we wouldn't really endorse if we had that visibility. I think that trend is kind of near a tipping point as well. Why is that important? Because it leads to a greater demand for solutions that Web3 can provide. Um, you know, you've seen, not to mention until I mentioned Donald Trump. Trump sets up Truth Social because he doesn't like what's happening on Twitter and he wants to have his own thing. Um, but if you had an alternative to Twitter, or perhaps if Twitter itself, given its new ownership was to lean into some of the content ownership and monetization opportunities that exist in web3 as we described it earlier. Um, I think that could be a really powerful leap for a company like Twitter, for example, or for a new company that decides to approach um, that whole space of very headliney near term data and opinion that Twitter operates in and looks to do that with this personal data ownership and monetization potential that Web3 can offer, amongst other things.

Speaker A: Mhm.

Speaker C: So I think those two trends are, those two trends are going to be very influential on how Web3 evolves. And look, the Internet's players today are not going to roll over and walk away. Um, so where they place their bets, who they choose to collaborate with, um, how they choose to, how they choose to lessen their control will also be a factor. I think the idea that we can kind of bash down and completely destroy the moats that these companies have built around themselves, that just doesn't seem realistic. So again, it comes back to that more centrist viewpoint that I've got around the whole thing.

Speaker A: Yeah, that makes sense. Mark, before we wrap up, what's a key message or takeaway you would like to leave with listeners?

Speaker C: Um, I'm always cautious when faith shows up as business. Um, when you mix ideology and business, I don't think you get great outcomes. Uh, maybe another way to put that. Is technology really good? Technology has always been about providing solutions to users. Users being businesses, let's not call them users. Right. Users are business. Users are individuals, businesses or groups or institutions. Um, so I think we need to get back to that with blockchain and figure out collectively in the traditional finance world and in the crypto and blockchain world, where fantastic things, some really, really talented people and some very interesting projects have, um, proven out some decent use cases and bring those two together. So it's going to be a lot less about ideology, it's going to be less about kind of tearing down the system and the kind of more anarchic, uh, aspects of what's been happening in the crypto world. And it's going to be more about where great technology typically always comes back to, which is identifying a problem and providing a better solution for it.

Speaker A: Yep. Take away. How can listeners learn more about worthy advisors, Mark?

Speaker C: Um, I guess, yeah, what do we say? DM me, uh, I'm on LinkedIn. Ping me. And uh, I'm happy to talk to anybody who wants to learn a little bit more about what we do. And just on that. Kelvin. Yeah, I mean, I hope there are a lot more companies. There are quite a number of very interesting companies in this space who look to bridge, um, the old world and the new. Um, and there's plenty of space here for more people to come and do that. So I hope others are willing to take the path they've taken and bring the skill sets that they've learned over decades from whatever industry they've evolved through and grown up in and been successful in. Um, and then look to bridge that and bring some of the great technologies, talents and ideas that have occurred in the crypto and blockchain world and, and match those up.

Speaker A: It would be a very, uh, interesting and exciting, uh, time in terms of how the technology intersects with different industry sectors and, uh, uh, uh, blending of the expertise and insights, experience from, um, uh, various parties. Mark, this has been. Yeah. Mark, this has been a highly informative conversation. Thank you for sharing your insights with us today.

Speaker C: Thanks, Kelvin. Yeah, and again, thanks very much for having me on. I really enjoyed the conversation with you today.

Speaker A: Thank you so much for tuning into this episode. For those of you who have not left a review yet, please go leave a review on Apple itunes or I'll be so grateful for that. Tell me what topics you would like to hear and who you like me to bring onto the show. So head over there. Do that now, and I'll see you on the next episode.