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Block Kong Breakfast: Jason Choi, The Spartan Group

“Invest, trade, borrow and lend, all without trusting a single company.”



Block Kong Breakfast is a series of interviews with blockchain-related entrepreneurs and financiers in Hong Kong, brought to you by Charles D’Haussy.

This is the final entry of the series, which now numbers 21 interviews, a number D’Haussy selected from the outset to mirror Satoshi Nakamoto’s decision to program Bitcoin to create a maximum of 21 million units.

It’s nine in the morning and I am witnessing bizarre spectacles: people kung-fu fighting invisible spirits, other walking backward. An 80-year old lady twirls a sword.

We are in Victoria Park, a green break from the crush of Causeway Bay and Tin Hau.

“Parks” in urban Hong Kong are usually tiled-over corners grudgingly maintained by real-estate developers. Victoria Park is different: originally a typhoon shelter, it was converted into a park as part of the island’s non-stop reclamations. Repositioned to actually serve the public, it is always busy.

This is where Jason Choi decided we should talk.

It is an unusual choice for an interview series that is meant to highlight breakfast spots in the city. On the other hand, this is Block Kong Breakfast, and we are now going to make the city itself our table.

Besides, I am prepared: breakfast is in my bag.

Choi is Hong Kong’s go-to person for all things decentralized finance, or DeFi. He leads investment research at a fundamentals-driven crypto hedge fund. Since early 2018 he has hosted one of the most followed podcasts for sophisticated crypto investors. With over a hundred episodes and five thousand weekly listeners, Jason has a wealth of experience and knowledge to share.

This morning’s walk reminds me of Central Park in New York. After a couple of hundred meters you swap the concrete jungle for the real jungle. The park is rich with multiple grass fields, large banyan trees and white wild parrots.

Victoria Park

There’s also an Olympic vibe. It seems like all sports are represented this morning. Soccer, frisbee, kung fu, yoga, running, walking, swimming, basketball, badminton, kickboxing.

Time for our business. “What is DeFi?” I ask.

Choi bangs out his answer like a tweet: “Invest, trade, borrow and lend, all without trusting a single company.”

DeFi leverages key principles of blockchain such as programmability, immutability, interoperability, transparency and being open to all (the jargon is “permissionless”).

A lot of DeFi is being built in the Ethereum ecosystem, and it has attracted a new wave of builders and users, despite DeFi being very experimental. The space has attracted financial whizzes as well as computer scientists. The blend holds promise.

“Imagine if Robinhood could talk to HBSC, Revolut and SoFi without permission,” Choi says.

A form of open banking on steroids, in which services are used and paid for seamlessly across multiple companies. That’s an interesting value proposition.

I am not dressed for the park. I’m not doing sports this morning, but the high temperature and Hong Kong humidity make short work of my shirt.

“Can DeFi dry out my clothes?”

Not yet, it seems.

Choi began to write about startups and entrepreneurship for HuffPost while studying at the Wharton School of University of Pennsylvania. When HuffPost ended its program for guest writers, he realized he would need to build his own media platform. That led him to a new medium too, and he launched The Blockcrunch Podcast in early 2018.

Bigger problems loomed when the U.S. declined his request to renew his work visa, so he returned to his native Hong Kong. By now he was keen to get into crypto directly, preferably with partners who really understood asset management.

“Too few people in crypto have experience in money management,” Choi says.

He became head of research at Spartan Group, a crypto investment and advisory firm co-funded by former executives at Goldman Sachs. There Choi helps manage the firm’s two crypto funds and supports its M&A activities. He also runs its venture fund, with investments in MakerDAO and a host of other blockchain-based projects.

DeFi has caught the firm’s attention. The ecosystem has mushroomed from $400 million to over $10 billion of turnover in just one year, with a myriad of teams launching functions for deposits, lending, trading, leverage, derivatives, payments and investments.

This year DeFi’s Uniswap protocol saw trading volumes exceed those of Coinbase, the largest U.S. centralized digital-asset exchange.

Back in Victoria Park, we have found a park bench and I serve my guest with milk tea and butter biscuits. Watching people practice tai chi, I ask Choi how he sees DeFi playing out differently between Asia and the Western world.

Jason Choi and Charles D’Haussy

“The West brings more developers to the space,” he says, although he sees teams catching up in China, Singapore and Thailand. “Asia offers larger pools of users, with looser regulations and friendlier tax laws.”

Hong Kong straddles these worlds. This could be its edge.

“Should bankers care about DeFi?” I ask. Let’s say the current boom turns to dust, just like the ICO craze of 2017. Then the answer is probably no.

Choi says we should consider two things.

First, DeFi is being built upon a blockchain infrastructure that is slowly but surely connecting to traditional finance.

Central-bank digital currencies, digital-asset exchanges, post-trade securities infrastructure and tokenized assets are now unstoppable global trends. Banks’ digital journeys now involve trustless, shared infrastructure.

Second, within the world of digital assets, the initial trend was to recreate centralized structures, the equivalents to traditional finance. We got a lot of OTC desks and market makers trading over centralized venues. But this is now giving way to decentralized, trustless arrangements.

“Why would you trust a counterparty with your assets, and go through signing lots of legal documents, when you can get a loan onchain with very little collateral?” Choi asks.

The blue-chip projects will solidify the foundation of this financial renovation

Jason Choi, Spartan Group

As the utility of DeFi infrastructure takes hold, he argues it will simply be more efficient, easier, and cheaper for everyone.

Still, I can’t help but look at this year’s volumes in DeFi and wonder if it’s a bubble.

“It will burst,” Choi says, “but blue-chip projects will remain and solidify the foundation of this financial renovation.”

Sometimes the advances in digital finance seem too far out to feel meaningful. Yet on my way home from Victoria Park, I stop by a convenience store whose cashier offers me 11 options of digital payments.

Who would have imagined such a thing just two or three years ago? It’s now much easier to understand soon these stores will offer yet another payment method: digital yuan, something that would have felt like science fiction just a year or two before.

Similarly, we are getting used to digital services rushed into operation because of COVID-19. As I make my way into the air-conditioned relief of the MTR station, I get the feeling that DeFi is the future, and the future is closer than we think.

Victoria park

  • Lucculus butter cookies, HK$55
  • Homemade milk tea
  • Total: HK$55

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Block Kong Breakfast: Jason Choi, The Spartan Group