Fintastico recently had the pleasure of interviewing Richard Olsen, CEO of Lykke.
Richard is a pioneer in high frequency finance with extensive entrepreneurial experience and well known for his academic work. He was a co-founder of OANDA, a currency information company and market maker in foreign exchange. Here are excerpts from that interview:
Hi Richard, could you tell us a bit about Lykke?
Lykke is an exchange with zero fees, smart investment products and simple APIs. Our goal is to democratize finance by building an exchange for all asset classes and instruments on blockchain with open source software ready for easy integration. We are much more than an exchange: we build an ecosystem of crowd based services and generate our revenue with financial engineering.
How do you compare yourself to other fiat-to-cryptocurrency exchanges?
We have a much bigger vision than other exchanges. We are building a new financial system from first principles. Our exchange will not just be fiat-to-cryptocurrency, but can trade all asset classes - it will eventually be a one step exchange all assets zero fees. We are on step by step journey: today, we offer narrow spreads for the major cryptos and major fiats.
Other exchanges generate their revenue from fees by charging price takers and rewarding price makers and offering discriminating between price makers and offer affiliate schemes to sign up new customers. This undermines transparency and opens the door for wash trading. We want to keep things simple and transparent, so we are building a zero fee exchange and earn money from our financial engineering.
What’s been the greatest challenge to overcome in the history of the company, and what’re some of the greatest achievements you’ve made recently?
The Lykke vision is ambitious, which is a big challenge for everyone. Our goal is to build a whole ecosystem similar what Google has achieved offering a broad range of free services and then generating revenue in the context of the ecosystem. Our challenge is much bigger than what Google faced. We have to become regulated. This is difficult, because regulation is a moving target, because regulators are changing their policies as we speak.
The greatest achievement is to have an awesome team - I have always been lucky working with highly gifted people, but never achieved to build a high quality team in so many diverse areas. Lykke is not just a software engineering project, we also have to master the legal complexities of regulation, build a financial engineering team and develop excellence in customer success, but also operate as an international team across the globe. All this is not easy.
On the product side our LyCI product is the first really amazing financial product. It is the start of a series of products that will soon follow. LyCI makes it so easy to invest in cryptos - investors do not have to decide, what crypto to buy; they can just buy the market; they can Hodl in an intelligent way.
Are you planning to expand the business with new products, and can we get some ideas of what it might be?
LyCI will get a lot of sisters and brothers, i.e. indices with specific themes. As soon as we get the Swiss OTF license (we still do not have definite target date, but it will happen this year:), we will launch a whole series of stable coins that are tokens representing traditional investment products. We do not lack ideas, so let us not promise heaven, lets start with the basics.
Are you actively looking for partnerships, and if yes, of what kind? Also, do you have any active partnerships or collaborations ongoing?
We are always looking for partnerships. I view Lykke as a platform, where individuals and companies or groups can build their own projects. We want to be facilitators.
This is also why, we also have a Lykke Business for the business to business solutions, where other companies can use our open source software with or without our assistance. We have been doing projects for large banks implementing a trading platform, white label wallets or building a blockchain based affiliate program.
We are also looking for partnerships with individuals and companies to market our products like LyCI. We have an attractive affiliate programs that is statistically based, where we track the origin, how we acquired the customer. This is a new approach that has a lot of potential, but is still in its infancy.
Where do you think cryptocurrencies are heading, going into 2019 in terms of new developments?
Crypto currencies have undergone a major shakeout that is still continuing and that is gradually finding its bottom. The community has at last realized that the blockchain movement is about building a new Rome and that Rome was not built in one day, so unrealistic expectations are falling to the way side.
2019 will be the start of Crypto going fully regulated and security tokens becoming the big growth area. Lykke will be a leader in this area. We always argued that the issue of regulation needs to be solved and that an integrated approach is necessary.
Another point - the investor focus will move away from individual cryptos to a 'theme' approach. It is too complex for end investors to evaluate individual projects, there are too many scams and smoke screens that make investor decisions difficult. It is a lot easier to invest in indices, which by definition automatically allocate to the winners and discard the losers. I am starting to pitch the investor story of LyCI :)
Thank you for your time, Richard, it’s been a great pleasure!