• In the bear market, it is important for DeFi projects and protocols to maintain sufficient reserves, be it in fiat or stablecoins
• Developing projects in open-source allow for opportunities for greater innovation and transparency
• Web3 projects should focus on building up the “New World”, as opposed to penetrating existing industries and markets

Rapid innovation, unique projects, and state-of-the-art technology are all hallmarks that broadly characterize the blockchain and cryptocurrency industry. Yet with the ongoing crypto winter that has seen the worst of the industry, even the most ardent and earliest adopters of crypto are left skeptical and doubtful as to the future for crypto – and it shows.

A national census conducted by the Crypto Council for Innovation earlier this month indicated that 52% of the 1,200 voters surveyed expressed a desire for greater regulation in the industry, with a mere 7% indicating that they believe that the industry should be less regulated. When developing crypto regulations, 58% of the voters surveyed wanted lawmakers to prioritize ensuring greater market stability and fraud detection.

While former Sen. Cory Gardner (R-Colorado), who now serves as the Crypto Council for Innovation’s chief political strategist, interpreted the poll results as voters starting to recognize the potential of crypto and wanting more “clarity and consistency” to be introduced into the industry, it is arguable that the converse is also true – that the public is growing increasingly wary and anxious of the space, and for good reason too.

2022 has been a truly tumultuous year for the crypto industry, especially in the wake of the collapse of Singapore-based cryptocurrency hedge fund Three Arrows Capital in June, as well as Terra’s collapse in May. Yet for many within the industry, the harsh bear market provides the opportune time to build, and most specially to harken back to the foundations of crypto: fostering greater innovation. To find out more about the future of crypto, as well as what innovation in the sphere looks like, we spoke with Max Kordek, the CEO of Lisk, an application-specific Layer 1 project.

“The way we push innovation is to develop our projects in open-source,” Max tells us. “Having it this way ensures that every developer can jump in on it and contribute towards it, bringing more innovation into the space.”

Lisk, which primarily focuses on enabling JavaScript developers to build their own blockchain application with the Software Development Kit (SDK) provided by the company, aims to foster greater interactions between individual project developers via its own blockchain, all the while keeping things as open as possible through their open-source strategy. Lisk is one of the many Web3 projects and protocols that value open-source development as a means to foster and invigorate innovation, especially during this unforgiving winter.

“We have to continue being modern, and innovative,” Max says. “It’s important to pave the way for further innovation, and especially with the Ethereum merge that just happened, I believe we will be seeing further innovation in L2s and rollups in the next few years, so I think that’s a very good thing.”

Indeed, with Ethereum’s transition from a Proof-of-Work consensus algorithm to a Proof-of-Stake validation protocol, many in the industry are excited to observe the this first step in Ethereum’s “rollup-centric roadmap” moving forward.

In addition, Max posits that developing projects in open-source also helps to introduce some much-needed transparency into the process.

Coinlive's interview with Max Kordek, CEO and Co-Founder of Lisk

“Having it (projects) in open-source allows you to control whether there is a backdoor or not, especially since we are dealing with digital assets,” he says.

“You don’t want external parties like the government to have the ability to exploit a backdoor and take away what’s yours. Every piece of software to be developed should be open-source to guarantee that there’s no backdoor available.”

Interestingly, even with the unforgiving bear market that has seen unprecedented drawdowns of Bitcoin (BTC) and Ethereum (ETH), DeFi protocols have managed to weather through - according to data from DefiLlama, the amount of money locked into DeFi platforms rose over 500% since last year. Nevertheless, it would always be wise for DeFi protocols to ensure they have sufficient runway during this difficult period, Max tells us. Especially in the wake of the Terra blockchain ecosystem collapse earlier this year, which led to almost $40 billion in investor losses, some protocols have generally been unprepared to deal with market downturns with large and coordinated sell-offs.

As John Patrick Mullin, the Co-Founder of SOMA.finance says: “Bear markets tend to weed out the weaker projects and founders looking for a quick buck. If projects are to not just survive but also thrive during the bear market, they have no other options than to innovate and create real value to the space and its community.”

Having weathered through several crypto winters before, Max tells us that Lisk has taken the necessary measures to batten down the hatches to pull through the difficult period, such as ensuring adequate reserves to keep the company afloat even in the most trying of times.

“We have diversified reserves to last for a certain time,” he says. “We have three years’ worth of store in Fiat, and two years in Stablecoins. Even for the latter, we are very careful in which one we pick. We hold reserves in USDC, which is heavily regulated, controlled and audited, so I believe we’re pretty safe there.”

Indeed, securing the future by maintaining adequacy requirements is indeed important, especially for a company that wishes to build for the “new world”, as Max says. He speaks of a world that encompasses novel technologies such as AI, machine learning, the metaverse, and play-to-earn games as well.

“What about the current world?” we ask. Since its inception, crypto has arguably been attempting to penetrate traditional web2 industries – with some success. An increasing number of web2 institutions are beginning to dip their toes into the crypto space, such as Starbucks’, which launched a NFT rewards program for its members recently.

“There will be minimal success in this endeavor,” Max refutes. “There are already established processes behind the day-to-day functions for traditional industries, whether it be supply chains, automotive companies, medical industries and so on. You can’t just introduce something as groundbreaking as crypto or blockchain technology and expect that everyone will adopt it.”

Max’s vision for the crypto industry then, is one where sights are set on the future by focusing their efforts on creating truly unique technological breakthroughs for the “new world” as opposed to attempting to remake or decorate existing concepts with blockchain technology.

“I think with crypto, web3 and blockchain, the advancement curve should center around introducing these radical and new concepts, not for the old world and the past, but for the new world”, Max concludes.

This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.