The 19 and 21 Year-Old Crypto Native Brothers Rebuilding Finance
InstaDApp founder Sowmay Jain shares his vision for the future of money
Hello defiers! This week’s interview is with Sowmay Jain, cofounder of InstaDApp. Sowmay and his brother Samyak dropped out of college to focus on crypto, won first place in an Ethereum hackathon, built a platform that quickly climbed to become the fourth biggest in DeFi by value locked, and three weeks ago closed a $2.4 million seed funding round with investors including Pantera Capital, Naval Ravikant, Balaji Srinivasan and Coinbase Ventures. All from Hyderabad, India. Not bad for 19 and 21 year olds.
Sowmay’s and Samyak’s story is an example of how much decentralized finance is lowering the barriers of entry thanks to its global nature, composability among platforms, open code and welcoming community. Anyone can participate in this emerging financial system, both as users and creators.
InstaDApp founders Samak Jain and Sowmay Jain. Image source: Yourstory.com
The interview has been edited for length and clarity and I’ve bolded my favorite quotes.
Camila Russo: Tell me about your education. I understand you dropped out pretty young. What prompted that decision? What did your parents/family say?
Sowmay Jain: I studied finance and accounting. Ever since we were in our teenage years, we have started participating in the Indian stock market and discussing finance on blogs and forums like Quora, generating millions of hits to date. We then went on to building software to simplify stock market investing and investing in crypto.
This was at the same time we were getting into crypto. Comparatively, I realized that the traditional finance systems we were studying in school were slow to innovate, extremely restrictive, tightly controlled by financial giants, and bound by geographical constraints.
Parents were initially a little scared about crypto as a whole and were not happy with our decision to drop out. Coming from the traditional financial world, it was hard for them to imagine a world where financial flows are not dictated by governments and monopolies. But once they saw InstaDApp having traction and community support and fundraised then it was quite easy to convince them. Most importantly tho, they are converts after we asked them to use the service. Now they have a point to brag among relatives.
CR: What led you to crypto in the first place?
Literally, for us, it was nearly impossible to participate in the global financial system. But with crypto, we are able to not only participate but also innovate from day one. In fact, we accepted grants, did payrolls and even financed our expenses from ETH backed collateralized loans (we did not want to sell ETH!).
In that regard, you can consider us DeFi natives, since we have been living and breathing crypto and DeFi for almost our entire formative lives.
CR: Was ETHIndia your first time building on Ethereum and meeting people in the community? What was your initial reaction at the hackathon?
SJ: Looking for a way to enter the space, we triangulated on improving the user experience for using decentralized financial services, since that was the main area that needed improving. With that purpose in mind, we entered the excellent ETHIndia hackathon. We developed a cool interface on top of MakerDAO and were lucky enough to win it, which provided us the platform to showcase our work to the wider community.
From there, we were kindly invited by Kyber Network to Singapore. They extended to us an innovation grant to build whatever service we felt was needed in the space. We continued exploring our core purpose of simplifying DeFi, starting with clean, simple interfaces. We eventually moved on to building our own contracts to streamline complex transactions, and creating a smart wallet layer.
At every step of the way, the Ethereum community has been incredibly supportive, particularly those in the DeFi space. It is hard to imagine another community that would be so open to new ideas. Their encouragement and validation have been critical for us, particularly when things did not work as well at the start.
CR: How did you think of InstaDApp? What was the initial goal of the platform?
SJ: Our main orientation has always been around finding the best way for us to add value to the space. Initially, we were focused on usability, when we realized that most of the services, while exciting, were generally more complex. So our initial goal for the platform was to bring services like Maker, Compound, and Kyber under one extremely easy to use service. In particular, as users were usually managing more than one portfolio, we had a dashboard that allowed them to monitor their holdings and interest across all these protocols.
CR: How has the initial concept changed?
SJ: It has not changed in the sense that we still think usability is the key to broadening DeFi adoption, but it has changed in the sense that we realized that it is more than just creating better UI. We needed to go far deeper in terms of creating smart contract layers to bridge protocols, provide financial mechanisms to switch positions between DeFi protocols, etc.
While other DApps are just interfaces for DeFi protocols, we have created a smart wallet layer between the user interface and protocols, which greatly simplifies the effort and cost of performing complex financial transactions, including lend/borrow, leverage and switch debt positions.
In doing so, we unlock the potential of DeFi for users by making it easy to optimize and switch funds and positions between protocols. We aim to create a more efficient markets since fund movement is critical to achieving that purpose.
CR: What are the main things you’re working on right now?
SJ: We are not able to unveil too much at the moment, but we are focused on making the DeFi markets more efficient, allowing users to have more freedom to use various protocols, and improving our product and community.
CR: What degree of control do you have over your smart contracts and platform?
SJ: We have no control over the user’s funds and positions. Each user has their own smart wallet on InstaDApp and can withdraw their assets from those contracts at any given point of time easily. In fact, our main goal is to prevent lock-in by making it easy to switch funds and positions between protocols.
CR: How are you mitigating risks?
SJ: As mentioned above, at no point in time do we have any control over user funds. This ensures that there is no way for us or an “admin” to access the funds.
Complexity breeds bugs and attack vectors, so we work very hard on having clean, minimal smart contract design, and also in using proven open-source libraries, as opposed to unnecessarily reinventing wheels.
We have gotten our smart contracts audited by one of the leading firms Open Zeppelin, and we are continuing to engage with more security experts to ensure our infrastructure is as robust as possible.
CR: What do you plan to add in the future?
SJ: We are not ready to unveil yet, but it will focus on making markets more efficient, allowing users more freedom to leverage across protocols, and making the service more and more accessible to power users and new users alike.
CR: Who are your main competitors?
SJ: Our main competitors, just like with the whole DeFi space is the status quo of finance, which shuts off access to the global financial system and keeps value creation in the financial space to an extremely small segment of the population. We think the whole DeFi space needs to work together to move the world towards a more inclusive and open financial system.
CR: Who are your users?
SJ: Our users are mostly DeFi power users today who are familiar with a range of protocols. We aim to incrementally expand the market to Ethereum holders in general, and then to more mainstream users in the future.
CR: What’s your big-picture vision for InstDApp? And a big picture for DeFi?
SJ: To make DeFi more accessible to the mainstream. A big picture of DeFi is to allow millions of underserved people to participate in the global financial system. Create a new generation of DeFi natives who keep and use more decentralized assets and financial systems than the normal ones.
We are in very, very early days. We are only collateralizing ETH assets now (which accounts for a very tiny fraction of possible assets), even Dai is still not widely accepted as a currency, and we have only figured out how to do the most basic of financial instruments (decentralized exchange and trustless debt/leverage).
Ideally, when several major events, like mainstream adoption of decentralized tech (not just crypto), collateralization of off-chain assets, and identity happens, we will see the full bloom of DeFi.
It will take several cycles and even generations, but hopefully, we can be a big part and contribute to that moving forward.
CR: The biggest criticism about DeFi?
SJ: It’s currently still a very small pool of people using it and a very small number of assets. There are too many barriers in many ways - from the usability to the lack of trusted assets, to the small number of users using it. It is important that we do not end up building a vast number of tools for a very small number of users. It is important that we keep on growing the size of the pie, in terms of assets and users.
CR: What are you most excited about in the space?
SJ: We are different from most people in the DeFi space in the sense that we have been doing everything in DeFi for almost our entire formative lives, including accepting grants, doing payroll and financing our expenses from ETH-backed collateralized loans. We believe there will be a new generation of people who will be more comfortable with DeFi than traditional finance. Furthermore, we hope this new generation of Defi natives can lead the way in terms of overcoming the constraints and barriers being created by governments and establish financial monopolies.