DAPPCON 2025: Andreas Fletcher - From Wild West Bankers to Modern Blockchains

Transcript

Okay, awesome. Thanks. Hello everyone. My name is uh Andreas. I'm a head of product at Wildcat. And today we're going to talk a little bit about credit um underaterized credit, why it's important, the history of credit, and what we do at Wildcat to provide underclass credit to um Ethereum. So if you look into the overall history of money, um, credit has been something that has been overall in all of the eras. uh we see Knights Templar in the 1200s where basically the pilgrims uh not the pilgrims but the the people were

wandering all over Europe had to either travel with a lot of gold in their pockets or they could choose to use IUS that were issued uh which is pretty much similar to what we have today in uh in the bank industry where I have money in my bank account but essentially it's not real money it's just the promise that I get money from my bank um And we also have concepts like Bank of Japan doing their uh two decades of cheap credit but u basically having no growth. And overall this basically shows that credit is not everything. You also have to design it in a way that it is interesting for people to use.

So like let's talk about how credit expands the money supply. We have different types of money and the the most you know common use of money that we have in nowadays is um debit money. So the bank that the money that you do have in your bank accounts which is basically created by the banks themselves in a form of underolateralized credit also known as fractional reserve banking where they can have a deposit and then they have uh the possibility to make um a lot more money with your deposit by using money multiplier and always backed with the hope that if you go to the bank and you want to draw money that the bank

actually has enough central bank money to give you the money that you should own in a way and the bank should be able to give to you. Um this is overall something that uh is you know being used uh in all modern world. Uh but that's also uh one of the reasons why I think we all are here because cryptocurrencies go a little bit against the concept of credit based money where they basically say um the fractional reserve banking and um credit implosion etc is something that we want to try to eliminate through the concept of cryptocurrencies.

the the the reason why unsecured credit is still so important for us is because there is not enough value generally to fulfill the need of capital in the markets. So to fuel innovation to let industries grow there needs to have be the concept of unsecured and underolaterized credit just because there is no other model that works as good as fractional reserve banking. So with all its you know bad concepts of fractional reserve banking it still is kind of the best concept that we have up to today even though it does have its problem in itself. Um regulators try to

solve these problems by laws or by securities. So if you for example have up to 100,000 in your bank account and the bank goes into default um the regulator or the state basically still fulfills the claim that you cannot lose more than a that you cannot lose anything below €100,000. So that's kind of security in a way that for normal people, for retail, for the day-to-day average person, that is sufficient. But then if we scale up to bigger companies, there's still always the risk that they might you lose money if banks go bust.

In crypto, especially because we have a lot of price um change, we have been introduced to stable coins and stable coins kind of help the whole concept of bringing unsecured and undercolaterized credit onchain because they represent actually a true value that we have in the real world. They either represent a euro or they represent a a dollar. The problem is that they don't solve the problem of scaling. So stable coins are typically not the same or they are not the same as the money that you have in the bank because where in the bank the money that you have is you know covered kind of by

a promise by the bank that they will repay you the money. Stable coins are covered with more secure like treasury bonds etc. So even though we now have an instrument or a tool onchain that kind of mimics the way we do payment in the in the traditional financial world, it still won't bring us to the volume of money that we need to compete with the trade fight space or to make crypto a valid alternative to the trade fight space.

The the good part is that credit and mika is very very um relaxed especially uh if you look at DeFi protocols because lending and borrowing is not within ma and uh stable coins are not considered to be money even though they kind of mimic money but overall that's something that we can actually leverage to our advantage for the next couple of years until they find a way to close that gap or hopefully not. um we can actually create money markets on chain that mimic even the way that underclass credit is being done in the real world with stable coins.

So since we're talking about Wildcat, since we're talking about um underclass credits and since I am from Wildcat, just a brief history of what actually Wildcat banking is. So back in the wild wild west era where they didn't have any central banks and you had to travel a long distance to reach cities everything was very remote. You had big companies, typically uh railroad companies that deposited or let people deposit their gold with them. And for that they printed money to them that they could basically use. And all of that was secured, but it also was under collateralized in a way that typically those banks gave out more money that

they actually have reserves. But for that area that was very in a way positive because it did fuel overall the innovation that we had there and it was supporting the whole gold rush and the gold boom that there was. The problem was that even though they did provide the accessibility to credit and they did foster the financial innovation there, they did eventually go bust and there were a lot of problems just because the transparency behind those wildcat banks was not there and also everything was very delayed. So since um my wildcat bank or my nearest Wildcat bank might have been like two to three

days on a horseback um I didn't know if that bank actually still existed. So at the time where I then wanted to go to my bank and you know pay something or get some more money or deposit something I ended up in the city and the bank was closed because basically they went into default. So a lack of transparency but also a lack of information speed was basically the downfall of wildcat banks which then resulted in actual central bank money concepts in the states and more regulated entities being able to print money and and create money in the states.

So if we look at, you know, the overall concept, the overall tools that we have in crypto, we have great technology, we have great assets, but we're still kind of struggling to compete with the tradefi space. And of course, people don't necessarily want to compete with the trade space, but at least we want to have some valid alternative to the trade space. I always explain it in a way that if I go and go shopping, I love to pay with, you know, banknotes, but I also love to pay with Magnos's pay credit card. I just like to have the, you know, alternative that I can choose what I want to pay with. And it's the same for me with crypto. In my opinion, crypto

should be a valid alternative to fiat. But currently, it is not. And the the reason is why it is not or like what happens if it is. We we we do see phases where credit mimics the traditional financial world and then it results in huge systematic problems. If you look at the last private credit era where we had the problems with FTX etc. it was like a huge problem because nobody knew what was actually going on.

So we did have underclass credit onchain in a way that it was very intransparent. We had private credit which was very in a way successful but it failed very fast because nobody knew what was actually going on. Nobody knew that these companies are in default or that they're losing money or that they don't have the monies that they actually came to be claimed to have. And the reason why this was is because or one of the reasons was because everything that they were doing wasn't actually recorded onchain. They were using Telegram, Google Sheets, Excel to track all of this and just use, you know, Ethereum or any other blockchain as a settlement layer to to actually transfer the asset. But there

was no actually insight. If you look at or compete or compare the the two worlds, we have cryptocurrencies and we have the overall credit market of the world. Like crypto in everything like Bitcoin, Ethereum, all of the stable coins and all of the other tokens that are seen on Crown Market Cap, it's almost like 1% of the credit market. And that's one of the reasons why I say that even though crypto is fun and you know crypto is growing, it's still not a valid alternative to the trade fight space because the gap is just so huge.

So the question is how can we close the gap? We want to provide an alternative to TradeFi, but we're not using the most powerful tool that TradeFi has, which is fractional reserve banking. And if we look at fractional reserve concepts or under collateralized credit concepts that are currently existing, they have huge problems. They're very over complicated. Um, they're mostly not very transparent. You mostly have one central entity in charge of distributing the loans that lenders are able to pay and that just does not give the trust or the transparency that we need to scale to the 300 trillion that we actually

need. That's why meet Wildcat, that's basically what we've been working on the last one and a half years. It's a protocol where borrowers can broadcast their desires to potential lenders and get credit either fully collateralized or undercolateralized or non-colateralized. We let borrowers basically present themselves and dictate or present the terms that they want to lend. We allow them to create markets in any ERC20 token. We allow them to um define what APR they want to pay. We let them define what withdrawal cycles they have. We let them define what people they want to get

money from. If it's a open access, if it's a closed access in general, everything that a borrower needs to present themselves, we're trying to offer them so that it makes them interesting for lenders to deposit. that will allow or that allows basically any underaterized credit that is being done on Wildcat to be as easy as a swap or a token sale or you know just a normal transfer. The idea is that we want to be a credit layer. We want Wildcat to be able to facilitate all types of credits, open term credits, fixedterm credits. Um we're working on credit concepts where Dows can back their underolaterized

credit lines with native tokens so that if Dows have a liquidity need they don't have to liquidate their you know DAO token which would result in a price decrease. We want to actually allow them to just back it and if there is a default and they cannot pay it back then there is a liquidation. We've been live since a year and a half, but we launched V2 in February 2025 with about 120 million in TVL currently. The long-term goal of Wildcat is to create this borrows depth token which kind of represents the true defy banking where for example if we have you know

vintermute being on wildcat as a borrower and um accepting assets and paying 11% in AP APR that the debt that is created there can actually be reused by the lenders to deposit that into AVA to deposit that into Oiler or to even use it on other exchanges as collateral to basically do OTC margin calls etc. And that kind of fosters the multiplication effect that we have in the in the trade space by you know making more money out of only a little bit amount of money. Small team questions.

Yes, I can literally almost not see anything because of the lights are so bright which is also good because there you go. Thank you very much for the interesting talk. Um biggest question I have is how do you um do the enforcement if a borrow does not pay back? Yes. Um good baseball bat uh is the easiest. No. Uh so we are in charge of just making it possible that the bar can present themselves. We are not in charge. We don't underwrite the credit.

We don't do any credit scoring. We don't give like any opinion. We're very objectively. So if the lender is convinced that the bar basically will not repay, then don't put money into that market. But if you think that they will repay, put money into the market. the the overall advantage that we have is the the gain of transparency. So the markets do have different types of health indicators. So there's healthy market, then there's like a a delinquent market and then there's penalty market. And it depending on what state the market is, it makes it more interesting or less interesting for a potential new lender

to invest into that market. So if the market is healthy, the lender can basically look at the market. they can see how much credit has flown into the market, how much credit has flown out of the market. Um, is it just like a fixedterm market where I can invest and then in two years I get my money back. Um, is the market in a delinquent state and then understanding the reason why it is in a delinquent state. It just gives more transparency of the actual market state. But we do provide um information about the bar. So we do onboard the bars with a KYB process where we make sure that if you see a name of a legal entity that it actually represents the legal

entity so that if something happens you could also take a lawyer and sue if there's a default. That's the worst case scenario. Now the question is not if that will happen the question is when that will happen and then what the market basically does with that information. Other questions for Andreas right here? Yeah, thanks for the presentation. Um like are there any minimum standards that basically you apply for like this borrowers to basically next to be KY key KYC to kind of like um disclose or if not is there like any tools that you provide for the borrower to kind of like disclose their financial statements if

they're a company or spending behavior or any any kind of or is it like basically mostly blank and you need to rely on whether they have repaid prior loans and you're like can actually like derive something from it because if they're taking the first loan, right? So being performant like if they pay back the first time in two years is like not really telling you anything then. That that's true. So we we um don't look at like the business model of the company and we also don't like necessarily about the like the pure details of the financials etc. But we do look at the company itself and make like try to make sure that it is a company that you know is actually there and that isn't hasn't

been like created a month before and just wants to like deploy market and then grab money and then run away. Um the the current results currently like with 11 borrowers you can see that the lenders are doing what is expected. they are depositing money into markets that either have been created by big companies that are well known in the industry or if they're not super known in the industry. They do provide like a very high APR that it is interesting for people to like put a little bit money into like you wouldn't put 100% of your money into a undercolaterized market of a company that you don't know just because you need to have like a little bit diversification of your assets.

Um so that's like the security that we provide in terms of you know we make sure that the company is who the company is but we're not objective of the business case. Um in terms of the transparency yeah um the financial statements at some overall like future time we want to add more and more features for the borrowers to present themselves as best as they can. Yeah. Like we we jokingly say it's like uh Wildcat is like the the Tinder for private credit where you like present yourself and try to get the matches and then you have to like be attractive for the lender. So like we have to figure out what is actually making borrowers attractive to the lenders. If that is adding more you know possibilities to

have like a profile with more descriptions or upload documents that you know have a proof record or connected to real world asset oracles that basically query and provide data about reserves that are holding in banks etc. All of that is you know in the scope and in the shaping. Other questions for Andreas. Right. If if not, we'll we'll wrap it up there. Thank you so much for Andrea.