Oneiro is Bringing Buoyancy to Cryptocurrencies with Their Coin ndau
When Bitcoin first debuted to the online world, it was used by a relatively small group of people on the ‘web.
Oneiro is an organization that had a similar beginning, but then spun-off into a full-fledged, venture-funded (funded by COSIMO Ventures) tech startup. Their coin, ndau, has a focus on long-term value in a fluctuating market. On the outside looking in, it sounds complicated, but the organization has remained ambitious and hopeful for plans to become a dominant player in the stablecoin space.
COSIMO Ventures CTO and an early user of ndau, Ken Lang sat down with us to discuss more the rather interesting history behind Oneiro. Lang also went into detail how a relatively new type of stablecoin is going to change the cryptocurrency market.
Colin Barry [CB]: Before we go on, let’s talk about cryptocurrency. If you could define what cryptocurrency is in the simplest of ways, how would you do it? What is “buoyant digital currency”?
Ken Lang [KL]: Cryptocurrencies are digital or virtual currencies created and designed to store value and can be exchanged for goods and services. Over the past few years – and notably since December 2017– cryptocurrencies have risen in popularity and fluctuated wildly in value.
The volatile nature of Bitcoin and Ethereum have caused many to look to a concept called “stablecoins,” or cryptocurrencies that, in some way, to a fiat currency in an attempt to keep their value stable over time.
We believe that those seeking to use cryptocurrency as a long-term store of value are better served by a new category called the “buoyant digital currency”. Rather than pegging to another currency, a buoyant digital currency uses built-in economic structures and incentives that aim to encourage growth in value over time while mitigating downside volatility – bringing the benefits of stability without the loss in value due to inflation.
CB: Tell me a little about your own experience in the Boston tech space. How did you get involved with cryptocurrency?
KL: I was the founder of a Pittsburgh-based company called WiseWire which was sold to Lycos in 1998. I then became CTO of Lycos and moved to Boston as part of that transaction, where I subsequently started other tech companies as well.
I first got involved in cryptocurrency several years ago while accumulating Bitcoin when it was reasonably unknown by most people. A group of us were intrigued by the potential for cryptocurrencies to serve as an entirely new kind of asset class with unique characteristics not possible before.
CB: What are the origins behind the Oneiro? How did the company come together?
KL: Three years ago, an anonymous group of early bitcoin enthusiasts and experts in fields including economics, monetary policy, cryptography, computer science and more came together to discuss the most significant barriers to mainstream crypto adoption for long-term holding. This group later became the ndau collective.
The collective identified 23 different issues with existing cryptocurrencies, the three most important being: volatility, dependability, and governance. The ndau collective believed these were the three most significant barriers to using crypto as a long-term store of value for both institutions and individuals.
Ndau was created as a solution to these three problems, with built-in economic incentives to provide buoyant forces upward on its value, and a well thought-out governance system that allows for pragmatic decentralized decision making.
Cosimo Ventures, the venture capital fund at which I am the Chief Technology Officer, made an equity investment in Oneiro to build out the underlying technology ndau. Oneiro continues to lead the development of ndau, including the building of its native blockchain, the first market maker entity that will fulfill monetary policy like releasing new ndau and buying back it back at a dynamic floor price, and other administrative functions.
CB: From a surface level, it sounds like what Oneiro does is rather complex. Could you explain what your company does and what is the overall goal of the company?
KL: Oneiro’s function is relatively simple: its goal is to manage the development of the ndau cryptocurrency. Building any new technology requires resources to turn the idea into a reality – office space, design staff, financial advisors, and developers are all critical parts of that equation. Unlike with some cryptocurrencies, Oneiro as a company isn’t the first entity in control of ndau, but rather is contracted to build ndau by a governing body, the Blockchain Policy Council, which is elected by the holders of ndau and oversees the whole ecosystem on their behalf.
CB: Now, let’s talk about ndau. What is the overall goal of this type of currency?
KL: ndau is named for its endowment, which is used as a source of liquidity to support its monetary policy, and it is made up of the proceeds from the sale of ndau and is invested in a diverse array of traditional assets. Ndau is precisely designed to have the ideal characteristics desired in a long-term store of value.
ndau was created in response to the most substantial barriers to mainstream adoption of cryptocurrency: price stability, governance, and dependability. It enters the market having learned from the shortcomings of the first wave of cryptocurrencies when used as a long-term store of value.
Unlike stablecoins, ndau is not pegged to a fiat currency. While stablecoins protect against downside volatility, their pegs limit their ability to rise in value over time – making them less suitable as a long-term store of value. In contrast, ndau incorporates built-in economic structures and incentives that tend to buoy its value upward over time while mitigating downside volatility. Ndau is ideal for anyone looking for a long-term store of value. It is designed to be resilient to local and regional economic shocks, has self-correcting economic mechanisms, and rewards long-term holding – making it ideal for institutional owners, pension portfolios or any other long-term value storage, defined as a holding for a year or more.
We believe that while ndau is the first example of this new “buoyant” type of cryptocurrency, we will see more emerge to meet the demand for coins that can serve as a long-term store of value.
CB: What are your predictions for the cryptocurrency/blockchain space within the Boston tech scene?
KL: Boston is rich with tech talent, and cryptocurrency and blockchain are only at the beginning stages of adoption. The opportunity for growth in this space is enormous. New entrants are beginning to challenge old ideas of what cryptocurrencies should look like, having learned from the winners and losers of the first wave.
I believe that Boston startups can learn from market failures and cater to what crypto and blockchain investors are looking for. The Boston tech scene is thriving, and the crypto community is continuing to grow. I predict that as the crypto industry matures, we’ll see more companies start in Boston to make use of the fantastic talent pool available in the area – both from universities and traditional financial institutions.
CB: What is a piece of advice you could give to startups who are getting involved in this space?
KL: It’s becoming more and more clear that to be successful in this space, a team needs to have access to cross-disciplinary expertise. Not just computer science and software development, but economics, governance, trading systems, security, and more. Grow your team sufficiently and make sure all your bases are covered. The days of starting a blockchain company with just a couple of tech founders and a white paper are over.