ENDOGENOUS - Looking inside DeFi for perspiration Bitcoin has offered an early view of what decentralised finance could look like. But after a few iterations, the name Decentralised Finance (DeFi) has become a noun by itself to mean an open digital financial ecosystem where you can build financial tools and services in a decentralised manner. Currently many of the applications are being developed on Ethereum, but other public blockchain platforms are being used for this development as well. Some of the more popular DeFi platforms include Kyber Network, MakerDAO and Uniswap. Far from perfect, many of these digital platforms are hosting early adopters, and the risks are mitigated by the protocols. One of recent cases of a security breach was on Lendf.me, a subsect of the dForce DeFi platform valued at USD25 million. They amount was returned and it became a lesson learned. Understanding the system is certainly a good protocol for those who are interested to delve into DeFi and many Malaysian blockchain communities such as Bitcoin Malaysia, EthKL and ACCESS have been making efforts to educate the public on this subject. Potential Impacts on Malaysia DeFi is being driven by innovation and decentralisation. Central to Malaysia’s strengths in this respect is its robust blockchain communities who are committed and independent with linkages to similar communities globally. Blockchain communities are known to be agile and enterprising, ‘hodling’ to the concept of ‘try fast, fail fast’. In DeFi, communities are moving along fast. In the face of an uncertain global financial situation, it would be advantageous for Malaysia to adopt the decentralised finance in beta mode as an option to build a more resilient industry using alternative financing. We are witnessing how PRC as a country could build a new digital infrastructure encompassing long term planning and testing and, testing a smaller scale p2p system within this bigger infrastructure could yield invaluable results.
Malaysian Government – Creating Trust for Business In addition to the inputs from local players, the creation of a new cryptocurrency unit under the Polis DiRaja Malaysia (PDRM) indicates government’s commitment to ensure order and create conducive environment for business. Such environment has attracted serious players as well as scams with local and/ or international connection. There are variety of scams and some even claimed offering legitimate cryptocurrencies with blockchain as the underlying technology. Serious efforts were taken to curb such scams, for example in November 2019where an online scam was busted in Cyberjaya. The augmented unit creates value to the blockchain/ cryptocurrency industry in the country. As COVID-19 unfolding, observable level of impact is not evenly distributed among the industry players: globally and domestically. Government taking up role as anchor as shown by the PRC government in the deployment of blockchain in its cluster of technologies, has been proven to provide resiliency in the industry to allow for the establishment of post COVID-19 “new normal”. Although still too early to gauge level of acceptance internationally, suffice to expect that the BNC will be nurtured to be the “Technology Diplomacy” parallel to on how “One Belt One Railroad” was promoted. As a small nation with China as its main trading partner, Malaysia should take this opportunity to nurture its own expertise in the respective area to negotiate a win-win outcome for the country and avoid adverse impacts of such major global initiative. This development also signals the increasing sophistication of related technologies, which will be critical in our current digitalisation initiative. It would be of a strategic interest for Malaysia to review the current abilities of local players which mostly are SMEs by initiating stimulus projects in which could help them improve on existing expertise and scale up to regional and global level. Doing nothing is not an option.
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Malaysian Technology Strategic Outlook 2019/2020 Intergration of High Technology
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