There is nothing quite like the formal front that hides a deviant behind. There’s a freedom that comes from having your mane whipped back as you open the throttle and blast into the night while knowing that as a consummate professional, you will be taken seriously in the light of day.
Lately, a mullet has become something more important to understand for anyone that’s interested in Fintech. The Decentralised Finance (DeFi) mullet that I’m talking about has a Fintech interface in the front and crypto rails operating in the back.
Historically, there has been a lot of tribalism in crypto, as natives dismiss non-natives, which distracts from the end game.
Ideally, DeFi products should make it as easy as possible for non-natives to onboard and use the innovations that are being created in the crypto ecosystem.
As the crypto ecosystem continues to mature, we are beginning to see a merging of crypto and the fintech products that consumers enjoy every day. Non-native consumers don’t care about what protocol they’re interacting with, they don’t care if there’s a guy in a tank top with rippling guns and a flowing mullet pulling levers behind the curtain.
Non-natives care about the ease of use and functionality that a product is able to offer them.
Historically, crypto protocols haven’t been able to support the level of use that the existing financial infrastructure has been carrying. As an example, Visa can currently handle 1,700 Transactions Per Second (TPS) with a theoretical limit of 65,000 TPS. Previously, the go-to chain, Ethereum, could process 12 TPS, which isn’t enough to make a meaningful dent in the global payments infrastructure. However, to take a few examples that have emerged since Ethereum, Terra can handle up to 10,000 TPS and Solana has a theoretical capacity of 65,000 TPS, which could theoretically begin to rival the existing infrastructure.
As the tools continue to develop, they will be able to challenge the incumbent infrastructure of the financial system.
Any changes in finance have been incremental with a lack of step changes because of the rent-taking nature of the finance industry generally. As a result, a majority of the Fintech solutions that are currently being built provide scaffolding to the existing infrastructure.
They build on top of the archaic infrastructure and provide a better user experience with more customisability and functionality. Yet they continue to remain reliant on a rubber band ball of code that undergirds it all. DeFi mullets are able to leverage new infrastructure that is inherently better than the existing system.
This isn’t an apples-with-apples comparison, there are other things that you can do with a bank that you can’t do with a protocol.
However, there are other protocols that you can use for each of your needs and a large portion of your requirements can be automated through code., This leads to a far more efficient system than the incumbent financial system. At the end of the day, financial services is a scale business, where the larger incumbents in TradFi are able to extract better margins. This premise is turned on its head when you replace people with code and create a self-supporting ecosystem with a crypto protocol.
One example of this is Kado, which enables users to shop and pay for goods with UST, the native stable coin on the Terra blockchain. The experience is similar to shopping on any existing e-commerce platform but instead of having the payment going over an existing TradFi network, like Visa or NETS, the transaction is cleared on the Terra blockchain. For all intents and purposes, users feel like they’re just using “any old” fintech interface, however, it’s all being powered by a blockchain protocol in the back. A sweet sweet mullet.
Dezy is a good example of the modern-day mullet, fintech in the front and crypto in the back. As of writing, you’re able to earn 5.65% p.a. by depositing Singapore dollars into an account. You don’t face any capital risk or fees and can withdraw when you want – just as if you were depositing into your bank or other fintech provider. However, the magic happens behind the scenes.
Dezy takes your cash, converts it to dollar denominated stable coins, which are deposited across a range of DeFi protocols. This earns the interest that accrues to you. There’s nothing stopping you from doing this yourself but you would need to deal with all of the complexity that comes with crypto.
Beyond their beauty, mullets abstract away all of the complications that are inherent when dealing with different crypto protocols. As the ecosystem continues to evolve, I believe that it’s increasingly likely that we’re going to see more mullets around. They were big in the 80s and appropriately, we’re entering another period where they will be big again but for different reasons.
As more crypto protocols become more user friendly and offer more functionality, we’re going to see consumers flock to them. Why? Because of the benefits that they are able to offer over the existing financial infrastructure. Mullets enable new financial infrastructure to be built that isn’t just scaffolding over the existing solutions that we’ve had for decades. It’s time for a refresh of the financial infrastructure, it’s time for mullets to shine.
That said, if there are other people that are building mullets in Southeast Asia, I’d love to speak to them - hit me at (sam [at] resolution.ventures.
Decentralised finance is an emerging field with fluid regulations. Learn more about the risks involved.
With a deep understanding of the challenges that all businesses face throughout their private-to-public lifecycle, Sam Gibb helps early-stage businesses get off zero.