Exclusive: Mark Cuban On Ethereum And The Path Of DeFi

Interviews with Mark Cuban and with active DeFi projects that chose alternatives to the Ethereum network.

Bitcoin’s 2020-2021 bull run has been like the cinematic run of Marvel Comics Universe superhero movies -- never-ending action, just a few low points, and ultimately a lot of money made. 

But if Bitcoin is the headliner in this film, Ethereum has had all the interesting character moments. 

Investor and entrepreneur Mark Cuban is quickly becoming a major advocate for Ethereum. He recently gave us some comments concerning the network by email. 

Mark Cuban

How big is Eth going to be in 2021?

“I can’t give you predictions with a calendar. Everything is always a continuous work in progress with breakthroughs and roadblocks.”

What use cases do you see driving the mainstreaming of DeFi?

“Obviously, the yields are the attraction. But what is missing for the mainstream is trust. There is an increasing number of rug pulls that will hurt new participants. That’s a problem.”

“So there has to be trust built up first. It’s analogous to when Rocket Mortgage got into the business. Historically, you got your mortgage from a bank. But over a period of years, they built up trust for alternatives.

Remember how people were afraid to use their credit cards to buy on the Internet? They didn’t trust Amazon, eBay, or anyone. Time and integrity build trust. That’s what it will take.”

Is it possible Eth will outshine BTC in 2021 considering the meteoric performance of BTC?

“Those two things aren’t related. BTC has claimed its role as a store of value with some global monetary transactions. Ethereum is the platform for smart contracts. 

As long as Eth can execute on its feature and performance enhancements, then it will continue to expand the applications built for it. That expansion, when used on 2.0 with 1559, means that in one manner or another eth will be used to fund the foundation for the future of business-changing blockchain applications.”

These responses are from April 2nd -- on April 7th Mark told Forbes that “Ethereum will Dwarf Bitcoin” in value.

Bitcoin may be the crypto hero of 2021 -- but Ethereum is relatable. It’s having a good year, but it’s not as big as iconic Bitcoin, and it brings the DeFi use cases that meet users' needs -- from global access to financial services, gaming, and NFTs. 

But is Ethereum really synonymous with DeFi? Are there non-Ethereum DeFi projects that deserve examination? We spoke to several DeFi projects with active users built on alternative networks to learn why they chose their platforms and the tradeoffs over the dominant network. 

DeFi on Alternative Networks

TAU Protocol, a staking project for Bitcoin hashrate tokens, offers an alternative way to invest in bitcoin mining and is built on the Binance Smart Chain, based on lower transaction costs relative to Ethereum. DeFi use cases are currently largely centered around being able to use synthetic bitcoin as a regular bitcoin for collateral.

“The TAU Protocol itself is neutral and able to be implemented on a variety of platforms. The reason why BTCST chose Binance Smart Chain is because of the lower transaction costs. If BTCST had tried doing the same thing on Ethereum, it would have been upwards of 30 times more expensive and operated a little bit slower. User experience was key in choosing Binance Smart Chain,” Tim Swanson, Creator of TAU Protocol, said. 

The Stacks Foundation is enabling DeFi products on Bitcoin. Mitchell Cuevas, Head of Growth at the Stacks Foundation, is adamant that DeFi is not limited to Ethereum.

"When people think of smart contracts or DeFi, they think of Ethereum, but few people know that Bitcoin offers the same functionality. There are certainly some places where the ecosystem of tools for developers is less built-out than Ethereum’s, but that is changing rapidly, and we think that given the relative advantages Bitcoin offers in terms of security and market size, you’ll start to see the wonderful experiments and models that have been birthed on Ethereum then take similarly big steps on Bitcoin,” Cuevas said.

Stacks also enables “Stacking,” where users can pledge Stacks’ native token (STX) to secure the Stacks network and earn bitcoin in return. 

Of course, EOS Network has gained some loyal support since its launch in 2018, and speed and no transaction fees have always been among the leading advantages. 

“We have been researching and developing EOSIO since 2018. The performance has been excellent compared to other platforms. It allows zero transaction fees, fast transaction times, and low latency when confirming new blocks for scalable solutions such as Evodex,” said Edgar Fernandez, cofounder of EOS Costa Rica and co-creator of Evodex, a decentralized exchange that promotes the use of EOS for DeFi.

Eric Godwin, Founder & CEO of BitSpawn, a blockchain esports and gaming protocol and platform, told us they are migrating away from Ethereum to meet their need for scale. While Bitspawn started with Ethereum, they are migrating to Solana, a “web-scale blockchain” which promotes its ability to scale today.

“Bitspawn’s private beta was built on Eth -- and is actually still running on a private Ethereum network. However, Eth in its current spec has scalability issues that need to be addressed in order to handle the load of tens of thousands of users in simultaneous gameplay,” Godwin said.

In addition to supporting game play for multiplayer games, BitSpawn is enabling liquidity pools for tournament events and using NFTs for player rewards to be purchased or earned in gameplay.

“We're migrating and building our layer 2 solution on Solana for speed and ease of access for gamers around the world. We do understand the importance of maintaining a token on Ethereum for ease of access, so we are going to be deploying on both chains and maintaining a 1:1 balance, giving our player community the ability to use both chains,” Godwin said. 

Gamers are a large and avid audience for any new way to play, but to XinFin, it isn’t all about fun and games.

Atul Khekade, Co-Founder of XinFin, an open-source Hybrid Blockchain protocol, is focused on using XinFin’s hybrid XDC Network to support global finance apps.

"The TradeFinex project, built on the XDC Network, is an example of a real-world DeFi solution for borderless financing. It operates as a cost-efficient platform, connecting real-world finance origination to DeFi markets, increasing competition among financiers, and bolstering economic growth through traditionally underfunded infrastructure projects instituted in developing regions,’ Khekade said.

XDC Network is offering its audience the promise of greater privacy on a private network. 

“Using the hybrid XDC Network, as opposed to public Ethereum, protects the privacy of sensitive data when appropriate, and enables more efficient transactions with lower gas fees, leading to better rates and returns for participants," Khekade said.

Interoperability & Horizontal Growth

Though there are some advantages to these alternative DeFi networks in the short term, it’s hard to say what a fully operational Eth 2.0 will bring. There is no reason why there can’t be more active platforms for DeFi, but sometimes growth brings consolidation. The leaders of the blockchain projects interviewed believe that variety and interoperability are the future. 

“Post global financial crisis, the trade finance industry has been consolidating, leading to the withdrawal of several correspondent banking relationships across high-risk markets. However, blockchain technology and DeFi will reopen some of those doors,” Khekade said.

Fernandez of Evodex doesn’t see consolidation as a positive movement in blockchain. 

“(The future is) scalability through horizontal growth and inter blockchain communication. Consolidation leads to conformity and can stifle further innovation. I expect different governance models to be the ones to compete, not so much the technical solutions. EOS.IO has proven to have many of the features that other blockchains strive to attain. The governance frameworks will be the differentiators...,” Fernandez said.

Respect must be paid to Ethereum for leading the way in DeFi and bringing the potential of its uses to broader acceptance. It remains to be seen which other players manage these DeFi use cases better and carve out a useful and lasting place in the DeFi ecosystem.

“Ethereum has paved the way for DeFi as a whole, and TAU Protocol is built off of the mission of DeFi. The market hasn’t fully decided which layer ones are going to stick around -- the game is not over,” Swanson said.