YAP Cast

YAP Cast S2E6: The Future of Managing Money With Mona El Isa, Avantgarde

Traditional Finance players are moving over to crypto. One of these players is Mona El Isa, who entered the finance world following university, and has set out to make money management a simple, more transparent process.

Once a trader at Goldman Sachs, Mona El Isa has spent the last six years delving into DeFi, is now the founder of a DeFi (Decentralised Finance) company called Avantgarde Finance, an asset management services tool built on DeFi.

A more efficient asset manager
Traditional asset management requires lots of multiple entities, set up in sometimes an expensive and slow non-automated process. According to Mona, the conventional finance or CeFi (Centralised Finance) stack asset management today is such that you have custodians who look after your assets. You then have the asset layer, in which people issue assets across different spectrums, such as bonds, equities and real estate, which is different depending on the country you are in.

This system is very complex for Mona, leading her to design her asset management infrastructure. “I got excited when I started to learn about crypto and blockchains because we could convert this heavily complex multi-entity experience into an effortless vertically integrated experience because now we have a blockchain that acts as a settlement layer.”

Enzyme finance has a custody layer for asset management, with assets issued on a particular blockchain. Some of these assets include ERC-20s, wrapped coins, NFTs, and an execution layer that offers lending, borrowing, derivatives, etc.

Finally, there is a fund admin and accounting layer, Enzyme, which enables people to do things with an immediate settlement with complete transparency.

After decentralising Enzyme, Mona noticed that decentralisation doesn’t necessarily move things forward without some leadership. ”Everyone was afraid to lead because they feared being perceived as not decentralised.” From there, she and her team decided to set up a new company called Avantgarde Finance.

How Avantgarde Finance combats the deficiencies of decentralised entities is by proposing they would become the lead developer and pitch the road map, product development and the priorities for the protocol. Users can kick them off as core developers if they’re not doing a good job. This way, Avantgarde maintains that decentralization whilst having the efficiency of a centralized organization.

A necessary framework: transparency, cheap, simple, accessible, possible to assess risk

Mona thinks transparency is the key. Without transparency, Mona believes large incumbents will stay in the asset management space. These large, lazy incumbents do not necessarily bring anything new and innovative to the space.

Mona also thinks access is really important in creating a future where accessing DeFi, understanding DeFi opportunities, and assessing risk is as easy as shopping on Amazon.

A necessary framework: transparency, simplicity, accessibility
Though Mona expressed that transparency does not stop bad things from happening, it allows for market scrutiny. Transparency allows people to scrutinise and therefore make a more accurately priced risk enabling more efficient markets.

According to Mona, transparency is not something that exists today in CeFi, which has allowed companies to get away with bad behaviour for long periods until they eventually became insolvent. “I think transparency is key in terms of pricing risk accurately or getting people to call out bad behaviour and pressure investment managers, asset managers to change their behaviour accordingly.”

Mona believes accountability is also essential when it comes to DeFi. When it comes to a financial conflict, it is difficult to hold people accountable if they say they’re going to do something and they do something else because of the lack of transparency. Even though financial intermediaries exist to try and enforce that behaviour, slow information makes it difficult to do that in real time.

In DeFi, you can embed specific rules and promises into smart contracts. That way, you can rely on those smart contracts to enforce those rules. For example, this way, Mona said people never have to worry about a manager deviating from a specific promise. If you want to invest ten particular tokens, you can code that into the vault’s smart contracts, not allowing the user to trade any other tokens. Mona believes transparency and enforceability are now possible with this degree of transfer.

Through speaking with Mona, it is evident that money management, although important, is also challenging, which explains why many fear the concept. After putting up with the structured and elitist way that traditional financial management worked, Mona spent the past few years trying to build something better on the blockchain. Her message is positive: DeFi makes possible some fundamental elements — cheap, transparent, simple, accessible, accountable, enforceable and, most importantly, easy to assess risk.

Find out more about Avantgarde here

Follow Mona El Lisa on Twitter here.