The decentralized finance (DeFi) space has ben like the wild west for most of its existence.
Now, we have Decentralized Autonomous Organizations (DAOs) who have provided some form of standard for the funtionality of the space itself.
The emergence of a new type of DAO is improving upon the various kinks that have occured as per governance within the DeFi space.
Pollen DeFi now allows the “power of the crowds” to reign and remain supreme within these kinds of organizations.
We reached out to Phillip Verrien who is the project lead and the Co-Founder of Pollen DeFi to ask about DeFi meritocracy and other issues.
Here is what he had to say.
Philip Verrien Co-Founder and Project Lead at Pollen DeFi
About Pollen DeFi
Pollen DeFi (https://pollen.id/), is a first of its kind decentralized asset index where the community holds all the power.
Decentralized finance is designed to be by the people, for the people, and Pollen DeFi is acknowledging this by building the first, truly decentralized platform for managing tokenized asset pools.
The merit-based DAO provides a reputation-based governance protocol with incentives that leverage the community’s collective wisdom to curate asset pools.
In this system, all users of the platform stand to benefit from the contribution of the best performing participants. Initially, the Pollen DeFi platform and its Pollen governance token (PLN) will manage a single asset token, the Portfolio Asset Index (PAI) token. T
he PAI token will be managed 24-7 by the community and is designed to be a low volatility ‘DeFi Lego’ which can be used in other protocols in the decentralized finance ecosystem.
After Mainnet launch, other communities will be able to create and manage alternative asset tokens via the Pollen DeFi platform.
About Philip Verrien
Philip Verrien is Co-Founder and Project Lead at Pollen DeFi. Verrien was involved with numerous early DAOs at the dawn of the Ethereum ecosystem and brings the technical leadership and lifetime of experience needed to run the innovative, DAO-based platform.
Involved with the blockchain space since early 2013, Verrien has a particular interest in decentralization and governance structures.
Pre-blockchain, his life was focused on venture building, the Swiss banking industry, banking technology, and Open Science with the EU government and CERN.
Please, can you tell us more about the launch of your asset management protocol?
Philip Verrien, Founder: Pollen DeFi is building the first truly decentralized platform for managing tokenized asset pools. Other projects have created products where tokens represent managed asset pools, but the underlying assets are selected by a central group.
They are great products, but we wanted to build a protocol that put the power to manage the portfolio of assets backing our asset pool tokens into the hands of the community of users.
Rather than transpose traditional asset management models, Pollen has created a DeFi native solution that disintermediates the relationship between participants.
Parallels to early DEX attempts can be made with EtherDelta as a case-study of where things went wrong.
The exchange’s design mimicked a traditional order book and matching process by simply transposing those onto smart contracts.
Because this was so ineffectual by design, AMMs became the solution, with projects like Uniswap offering Liquidity Pools that use collateralized bonding curves in an economically sound process and with an elegant protocol that was entirely unrecognizable to its CeFi order book counterpart.
Likewise Pollen has rethought asset management from the ground up, with economic incentives and an elegant protocol that does away with concepts such as ‘Fund Manager’ and that puts the community in control.
Please, can you tell us more about your token generation capabilities within the Pollen DeFi platform’s DAO framework?
Verrien: The Pollen platform allows our community to manage asset pool tokens.
The asset pool tokens are a basket of underlying token assets.
At launch there will be a single asset pool token. It will be called PAI (Portfolio Asset Index).
Once we are up and running, other asset pool tokens can be created.
Groups and communities might decide to set-up their own dynamically managed asset pools, and that group can manage the asset pool token together.
What is the central premise behind a decentralized finance (DeFi) meritocracy?
Verrien: We have created a platform which allows participants to prove their abilities.
If you are skilled at managing a portfolio, the platform will recognise this and increase your reputation within the system.
If you make bad decisions, you will lose reputation points.
In this way, the best portfolio managers will rise to the top and have a greater influence on the assets making up the asset pool tokens that the Pollen DeFi platform manages.
In such a system, it is not about wallet size, it is about skill. Skillful portfolio managers will earn rewards reflecting their ability, and those that delegate their governance tokens to the best performers will share in their rewards.
Please, can you tell us more about governance on the Pollen platform and the POLLEN (PLN) token?
Verrien: We want Pollen DeFi to be accessible to different user types.
You might hold the PLN governance token purely because you wish to earn a yield, earned in additional governance tokens.
In this case you will passively delegate your PLN governance tokens to the best performing portfolio managers on the platform. If they continue to make good decisions, you split the rewards.
You might hold the PLN governance token because you wish to be an active portfolio manager, making judgements on the best asset allocations to go within an asset pool token, like PAI.
In which case holding PLN in your wallet allows you to submit your portfolio balancing recommendation, and in doing so you stand to earn both reputation points and additional PLN governance tokens in return if your recommendation is beneficial for the performance of the PAI asset pool token.
The PLN token provides the incentive to make good decisions; whether that is the decision to actively manage the portfolio or to passively delegate your governance tokens to others. In this system, all users of the platform stand to benefit from the contribution of the best performing participants.
How are the crowds going to define finance in the 21st century?
Verrien: There is a lot said for the wisdom of crowds in the markets.
Today, however, the prevailing wisdom is under assault.
The ‘masses’ now have the ability to enter the markets together, collectively, and through crowd-sourced strength they are able push back on the centralized powers that have dominated the classical financial markets. Gamestop and AMC come to mind as illustrations.
At Pollen DeFi, we refer to our community as the hive-mind.
The message we share: Great minds don’t think alike. They think together. Blockchain technology provides new methods for ‘crowds’ to work together, and the paradigm is shifting.
Congratulations on the launch of your asset management protocol! What’s next for Pollen DeFi?
Verrien: We are in countdown to launch.
We are just emerging from our stealthy ‘building’ phase, and sharing news about our product development, partners, launchpad, token and platform launch dates.
Keep an eye on our telegram channel and twitter feed to stay in touch with the latest.
Next for us is creating the most well-informed and engaged community in DeFi.
We need to keep stimulating and raising the financial IQ of our users as this will most likely lead to improved decision making, for the benefit of all token holders.
Please, can you tell us more about the team behind Pollen DeFi?
Verrien: Pollen started as a concept and an exploration, and emerged from the coming together of the Open Source community.
Over time we took on private investment to allow us to focus on delivery and have built out a core team.
We are proud of our Open Source roots.
The team is about 20 people in total, with several years of professional experience in crypto and blockchain before Pollen, and a combined decades of traditional financial services experience prior to that.
Companies like Dapper Labs, Aave, Celsius, Qredo, Launchpool, Accenture, Salesforce, HSBC, to name a few.
Recent joiner, Sean Bond, takes on the role of CMO.
His last engagement was at Launchpool, so we will be leaning on his experience of launching projects as we move into this critical phase of communication and community building.
What are the values that drive Pollen DeFi?
Verrien: We want DeFi to be accessible to everyone that wants more control over their money (and tokens!). So we are focusing on accessibility.
We are majoring on UX, approachable and intuitive design and clear communication.
The Pollen DeFi platform will offer different ways to engage with the asset pool tokens based upon skill, preference or time available.
We consider ourselves a ‘DeFi 2.0’ project.
We believe there is a wave of decentralised finance projects arriving on the market which are built for a broader base of users than the “DeFi summer” products.
These more mature projects tend to have more familiar parallels in the traditional finance world, so they are easier for new entrants to grasp, but come with DeFi added value – like transparency and community empowerment.
Please, can you tell us how community participation initiatives are developed?
Verrien: Those who want to create a portfolio for one of the platform managed asset pool tokens can simply connect their wallet to the DApp and get started.
They will need to hold a small amount of Pollen governance token (PLN), but the threshold will be low.
These users will navigate to the asset pool token they wish to rebalance, and make their recommendation.
Based on their reputation – earned on merit, the performance of the assets they suggested for an asset pool token versus the ‘live’ asset pool token, and the suggestions of other users also making recommendations, the platform will rebalance the asset pool represented by the token.
Initially, management will be of the Portfolio Asset Index (PAI) token, but communities will be able to create new asset pool tokens to be managed by the community through the Pollen DeFi platform.
We will reveal more details on how communities can launch their own asset pool tokens as we approach mainnet.
Please, can you tell us about the PAI token and its functions within the Pollen DeFi ecosystem?
Verrien: The Pollen Asset Index (PAI) token will be the first asset pool token to be launched and managed by the community on the Pollen DeFi platform.
The PAI token is designed to be a low volatility ‘DeFi Lego’ which can be used in other protocols in the decentralised finance ecosystem.
The asset pool that makes up PAI is dynamically re-balanced by the protocol after observing the portfolio recommendations supplied by the community.
There are several data points the protocol monitors, including the proven reputation of those making proposed adjustments, and we have a modelling team and data science group that fine tune the way that humans and algorithms work together to the best outcome for the asset pool token.
The PAI token reflects the cumulative assets that make up the main Pollen Asset Index portfolio, and it is fully-backed by the assets within the portfolio.
Another way to think about it is that the TVL in the portfolio should be equal to the market cap of PAI (Portfolio Asset Index) token.
What are the factors that protect the Pollen DeFi ecosystem from volatility?
Verrien: Asset pool tokens are managed by the Pollen DeFi community on the platform and are dynamically re-balanced 24/7.
If market conditions change, the community will collectively make decisions that will increase or decrease exposure.
For example, in a moment of market uncertainty, participants are incentivized to rebalance the portfolio from more volatile assets to stablecoins, wrapped Bitcoin, and other suitable assets to preserve and optimise the portfolio’s value.
The protocol will process the recommendations these high performing contributors are making, cross reference against other data points it is tracking, run against several models from the data science team, and then re-balance the underlying assets for this asset pool token.
The protocol amplifies the power of the collective to manage asset pool tokens effectively.
A further protection from volatility is that holders of the governance token Pollen (PLN) token who do not actively engage in portfolio management, and instead passively delegate their voting power to the best performing active managers, lend weight to the proven best performers.
This process is called ‘Collective Delegation’.
This helps both to scale reputation and simplify the delegation process, while ensuring that voting power is always delegated to the most skillful.
How can anyone create an asset pool token within the Pollen DeFi ecosystem?
Verrien: Communities will be able to create their own custom asset pool tokens.
They will be managed by the same platform and Pollen (PLN) governance token, but can have their own parameters and objectives for their asset pool token as determined by their creators.
The process of launching a new asset pool token will be community driven, and we plan to share more on this as we approach mainnet.
What steps have been made towards ensuring the security of the Pollen DeFi ecosystem?
Verrien: Security and transparency are paramount to any decentralized project.
We will be undergoing multiple smart contract audits before launch and will share the results publicly. And transparent governance processes will be put in place.
You can also check our Github in the meantime (note that we are currently pushing updates to the Github with a few months delay, similar to Uniswap, to avoid copy-cats).
How are asset pool tokens uncoupled from the digital asset markets within the Pollen DeFi ecosystem?
Verrien: Asset pool tokens managed by the Pollen DeFi community through the platform are dynamically re-balanced 24/7.
If the market conditions change, the community will collectively make decisions that will increase or decrease exposure.
For example, in a moment of market uncertainty, the highest reputation active participants may switch out more volatile assets for stable coins or perhaps wrapped Bitcoin.
The protocol will process the decisions these high performing contributors are making and rebalance the underlying assets for this asset pool token.
Compare this to other financial products that track underlying assets which maintain full exposure through ups and downs, and you can see the value of a meritocratic governance system enabling the best performing members to add or remove risk.
What measures are taken to prevent market manipulation within the Pollen DeFi ecosystem?
Verrien: Market manipulation is a huge barrier to entry to this space, and one of Pollen’s goals is to allow our community to break free from noisy markets and find a safer way to participate.
Pollen’s reputation system ensures that the most seasoned users are making the majority of decisions.
Economic incentives, wisdom of crowds and being part of a vibrant and informed community also plays a part.
We will share further information when we bring the product to the community via our ‘Community Release’.
Are there any roles played by artificial intelligence within and around the PollenDAO ecosystem? Please, can you tell us the role of AI here if any?
Verrien: Fundamentally Pollen DeFi’s protocol leverages economic incentives to manage asset pools, with each asset pool having its own governance progress and portfolio thesis.
As a project with open source roots, we’re keen to allow asset pools to develop tools and plugins to extend our protocol. We see future AI plugins as part of this.
What propelled your decision to launch within the Polygon/Ethereum axis of the cryptocurrency space?
Verrien: You have to go where the community/assets are, and most are on Ethereum.
This may change, and we are adaptable.
We have built a cross-chain protocol, and so users can choose to operate on layer one ethereum, or they can interact via a layer two solution.
Polygon integration is built, and we have also built alternative layer two options for Pollen DeFi users. Keep an eye on our social media for further planned announcements.
Obviously gas prices on layer one have been prohibitive for many users of the ethereum network, so giving our community and token holders access to options is important from our equality of access standpoint.
Where do you see Pollen DeFi in the next decade?
Verrien: Great question!
We see the market standing, perhaps unknowingly, on the edge of a second wave of DeFi innovation and adoption.
It’s what we call DeFi 2.0 – a wave of projects coming to market with better product maturity and improved accessibility for a broader audience than the first wave of products in the DeFi Summer.
For example back then the key products were hard to fathom for most users – providing liquidity for loans, being a market maker – those were difficult financial vehicles to get your head around if you had only ever invested in TradFi trackers and ETFs!
In DeFi 2.0 we see decentralised finance products that have created equal or better experiences to traditional finance products – decentralised perpetual trading platforms for example, and of course through Pollen, access to dynamically managed asset pools aiming to outperform the market for participants.
The second, equally important part of this: the DAO.
We are building a protocol that lets the community set-up asset pool tokens and manage them, with no middlemen. Over time, Pollen DeFi as an entity will migrate to being a full DAO.
This is an evolving process, and one we are passionate about.
The community will in time take over the operation of Pollen.
What are your plans for cross-chain capabilities?
Verrien: We understand that with the gas fees on Ethereum, people are looking for alternatives, which is why we are in the process of enabling Pollen DeFI to work on multiple L2s/EVM compatible chains as users migrate there. Polygon has been announced, and will be sharing more about this in the near future.
How has DeFi changed your life?
Verrien: I would describe myself as a technologist with a particular interest in decentralization and governance structures.
So you can see why decentralised finance would engage me!
In a previous life I worked in Swiss banking, Venture building and Open Science with EU Gov and CERN. DeFi allows me to draw all of this together and create with passion.
I have found this space draws passionate, like-minded people together, and there is an electricity in this space that we all thrive on.
The end goal is to contribute to the democratization of finance. Empowering people to take control over their money and vis a vis their lives.