Alex Gazdac: Ethereum in Action: DeFi & Real‑World Use Cases

I know a lot. We are friends for a long time. I know his expertise. But I do have a question for you. Did you heard about Bitcoin?

Did you heard about Bitcoin, Ethereum, smart contracts? Okay. So, you have a good point to start from. Um, I'm going to talk about some of the basic fundamentals of Ethereum and some of the real world use cases for it. And I'm going to go briefly into the main thing that it's on blockchain right now and that's DeFi.

And D5 means decentraliz finance. It's I will call it the next level of finance. And basically the most important question is what why the finance is so complicated today? And basically let's imagine a P case you have u you have to send money overseas and that process it's very very difficult you have to go through a bank you have to send a transaction that bank has another bank that spokes it's going this your transaction is going to that bank then you have an clearing house which is checking the transaction then everything is happening in like maybe one to two days and you have plenty of middlemans. The process is very slow.

It's like sending a paper through written horse instead of using the email nowadays. And also we are pretty lucky because we live in Europe. We have plenty of financial services going on. But there are a bunch of countries and there are like billions of people which have a very limited access to financial services and defy promises to solve it. There are four pillars when it comes to money operations.

You have the borrowing. You can borrow money from the bank or other persons. You can lend them and then borrowing them uh the money from you. You can swap them. You can swap a currency to another one and you can earn them.

These are the main pillars of like traditional financial services. But the problem with these operations is the fact that they are very complex. it's very hard to put them together and usually they are being serviced by different providers and it means that you have to do a bunch of operations just to tie them together. Um now we do have Oh yeah. Yeah.

So these uh pillars are sending at the core of D5 as well. But the main difference is for example I'm going to give an example from Lego. Like you have basic Lego which is nice. It's colorful. You can build a lot of things with it.

But for example, you want to build a Porsche or a rocket. Uh you cannot do that with like Dubo Lego with simple Lego. But that's traditional finance. And you have also um technical Lego which has more p uh small pieces. They're very standardized.

You can put them together and you could build amazing things with them. And that's uh that's D5 for finance. Now what is pretty cool about them is that they are open source. They are standardized. You can take them, fork them, put them together in no time.

And you can build amazing financial services. One of the examples will be lending. You can build a decentralized lending just by putting these pieces together. And what is pretty cool about that is the fact that basically you don't have any middleman uh for it. You can just put your money in what we are calling a pool which is a big piggy bank which stores uh all the money from all the users which are using it and then Louis for example in this scenario can come to that and he can take a loan and you as a user which who was sending money to the pool can gain interest in no time.

You don't have to wait for the end of the month for the end of the trimester like for any traditional bank. you get your interest in a time in seconds. And all of this happens in a 247 uh period. You don't have to wait for the markets to open for the bank to check your transaction. You can just um earn interest in no time.

Another pretty cool thing that we are using is uh because we living in Europe, you are exchanging almost on the daily basis our currency run to euro. You can do that uh with tokens on a decentralized uh exchange which basically operates the same. It's operates 24/7. You don't need to sign up. You don't have to wait.

You can just trade your coins instantly. And um also there are multiple use cases which can u you which you can use in in smart contracts and in defy. You can program your paycheck. For example, you can have like a 50% of your paycheck to go to daily day-to-day expenses and beers. You can have 30% of them going to savings and then you have the other 20 for video games and pizza for example.

And you can program all of your paycheck to go in those accounts that you're using for this uh these activities. Yeah. Uh the main issue which I see blockchain has right now is that defy it's mainstream. It's in the headlines. It's very popular.

Anyone talks about it. It talks about the scams. It talks about how you can move all of your money in DeFi and use them to do a lot of amazing things. But we can use the foundation the technology which is the foundation of DeFi in a lot of other traditional real world use cases and businesses. And here I just mentioned a few of them like supply chain, identity, voting, healthcare but it can be used in logistic, transportation, real estate and um gaming for example.

Now uh I would like to talk about your morning coffee and the beans and the coffee beans that have been used to provide that coffee for you. Basically your coffee it's u probably originating from Brazil or uh Indonesia or Asia and it goes a long way until it reaches Meron or other coffee shop in Romania. The supply chain of the coffee is very complex. It like usually a bag of coffee goes through a list of 20 to 25 providers along the way. It's being shipped overseas.

It's being carried with airplanes. It goes through borders. It's go to customs. All of this process, all of these processes, all of these operations are being uh handled by a lot of intermediaries, by a lot of companies which b all of them have like a stake of files, a stake of data, they have multiple database systems which are not interconnected in them. And what happens in a lot of cases?

There are a lot of data discrepancies. There are a lot of there is a lot of fraud going on. There is a lot of exploitation being done on the farmers. There is a lot of warehouse incidents where the supply the goods are being mistakenly sent to other shippers. There are of accidents in the shipping industry as well.

And when you go and buy a coffee from your local shop or from like your local coffee, you cannot be sure about information on the packaging. And this uh supply chain on blockchain promises to resolve it by doing the following. Basically what you can do is to put all of these operations on u on chain. You can create an digital identity for the coffee bean production or for the coffee bean bag and use it as an NFT which is being generated by the farmer when he's recording the coffee. Then when uh the shipper or the middleman the intermediary buys it from the farmer he can update the state of the coffee as purchased u on the digital identity of the coffee and this process can go uh can be similar for the shippers warehouses roasters and retailers as well.

Um all the data can be tracked and record on blockchain through all of these events. You don't need to have another custom software or another database or another like big stack of files in your office in order to uh store this information. And what also what is also an advantage of having the supply on blockchain is the fact that um there is competitive transposibility and um you can also traceability and authenticity of the good. You can for example scan the QR code in the coffee shop and see the whole chain of transactions for your coffee. And the coffee is just an example.

You can trade also diamonds. You can trade the pharmaceutical products. You can trade uh microchips. Yes. So here I just wanted to represent how some data on the NFT would look like.

You can have a lot of informations but I think these are the most important for the users. I have friends at the conference for which the source of their product is very important. They want to know what they're eating, how it was sourced, how it was transported, in which conditions it arrived to their shop, and if the food has passed u all of the health checks. And basically, we can do that for uh shipping containers, we can do that for coffee beans, we can do that for bananas, we can do that for Lego, we can do that for everything. So yeah uh I think the most important aspects of uh and enhancements on uh supply chain on blockchain are the following.

First of all for the consumer you have the proof of authenticity. For example, coffee. You can check uh all the d about where it originates, how it was transported, who recorded it, if the farmer got paid on time or not, and how it was stored. But also for the businesses, uh there's an IBM study on supply chain on blockchain and the business can um enhance their operations by 70%. And um also there's Walmart in USA which managed to reduce the food fraud and reduce the uh expired food by 90% by leveraging blockchain on their supply chain.

And for farmers I mean there are bunch of farmers in Africa, Brazil, Indonesia and Asia which are being underpaid or they are being exploited. And you can have for example a smart contract which when the coffee bean uh NFT or example is being shipped it can trigger an event and the smart contract is delivering the money to the farmer directly and the farmer doesn't have to wait for a 90-day invoice to be done. They don't have to wait for their owner to pay them. They are going to receive money instantly. Yeah.

And this is uh the presentation. I think we are just start getting to start u understanding how this technology can impact real traditional businesses and how it can make a difference um besides defy any questions.

Sure.

So how would you say it's different from a QR code? Uh basically the QR code is just interface that you are seeing. You can scan it and see some data. The data which you are seeing because if you have a normal database in which the data is being stored then the company which is storing that data can also temper it. It can modify it.

And by having a decentralized database like uh the public ledger on blockchain uh exposes you can make sure that the data cannot be tempered or altered. You can modify the values of course but then another block is being created and you can see that a change of value took place on the on the data. So every action upon the data is being tracked and recorded and you can see who initiated that action. That's the main difference.

On the same note, since I since I know that you are working on very interesting supply chain uh applications, um we all know that really blockchain is just as powerful as the or any system as the data that that you feed to it. Can you explain to us for example on like protocols that you're building what are like factories or like really your clients using to actually prove that that data is originating from that specific machine in a factory and it's not temporary or it's not like the value that the factory wants to showcase but the actual value.

Yeah. So I would like to first to mention the fact that supply chain it's a very big and complex problem. There are thousands of persons which are working on a supply chain just for a specific company. For example, April which is sourcing products and raw materials from whole the world actually. And for the supply chain executives, the most important thing is data.

They have to have data. They have to have data correlated between all of their infrastructure and sectors. They need to have financial data. They need to have supply chain data. They have to have logistic data, warehouses data.

They just have to have data. And um the thing that currently sucks is the fact that their IT operations usually are being uh filled in with operation requests. They have to debug a person's computer. They have to maintain their systems up and ready. They don't have place and bandwidth for innovation.

And another thing that consumes a lot of money and efforts from the IT operations teams is building data pipelines between the systems. You have vixels, you have ERPs, you have uh database records for like warehouses and they are building custom data pipelines behind here. like a bunch of money are going into a bunch of different data pipelines when you can have just one simple data pipeline between each service and the blockchain instead of building 10 different pipelines for the same service. And to answer your question, for example, um on the most important and the biggest supply chain project that I'm working on right now, we updated the IoT sensors in the factories with um a temperroof solution for their sensors in the following way. you have a small string attached to the container of the IoT sensor.

So if someone tries to open the container and modify the IoT sensor of that specific container, then there is an alert being sent to the blockchain which automatically invalidates the all the data which is being sent by the sensor further on until someone checks the sensors and says okay yeah the sensor is fine. It was not tampered. And also we do have something we have a decentralized oracle network. That's the name of it. Basically with fetch data for specific information from multiple sources like we have AI on CCTV cameras.

We have RFIDs on the products. We have uh a bunch of different sensors on the trucks which is are loading the containers. We put all the information together and if an information or an event is being validated by two to three or f four sources then we can measure we can make sure that yeah that information information is correct. For example, if you take a let's say a crate of coffee beans, you can you can take it from the factory. The CCTV camera sees you sees the crate.

You take it outside there. There's an RFID on it. You can put it in the truck and you can see that the LFD left the factory. You can see that the camera track the movement of the crate and also you can have a sensor in the truck which validates the fact that that specific FID is in the truck. You have three points of truth and you can combine them to make sure yeah that information is is valid.

The crate has pre- left the factory. Any other questions?

Do you think that this example that you said with coffee can happen in the near future or it's already happening with some other programs?

I think it's already happening but on a smaller scale like there are companies especially in USA which have like a big supply chain inside them. They are sourcing raw materials and different goods from like all over the world as I mentioned before and they are spending billions every year just trying to maintain their supply chain. It's outdated. It's overdue. We saw a bunch of supply chain issues during pandemic when April stores were run out of products.

You had issues with the toilet paper and sugar because there was no traceability and not actual valid data in the supply chain and the supply chain executives couldn't make any decision because they couldn't understand what's happening globally with their supply chain. So uh yeah during the pandemic they started to take action upon it and see what they can do about it. They understood the fact that building custom data pipelines for every service that they are using and for every department it's very cost expensive. It's very time expensive. They don't have usually that resource and they tried to explore other solutions and one of the solutions is blockchain.

There's IBM cloud which offers some solutions for small businesses and large large businesses as well. It's just a prototype right now. they it's working but there's like a lot of things which can be improved. There is uh Whole Foods in USA which already have an P of blockchain working on uh working inside their supply chain. You have Walmart which is also using blockchain right now and they are one of the best best examples currently in the supply chain industry on blockchain use cases.

So yeah, there are some initiatives but uh I think we are just getting started on it and then yeah sorry

also like didn't MK have an initiative and then they canled it and then

what's like why and what's the new one or do you know

yeah so basically they canceled the initiative because um there was the AI bubble coming and they figure out okay we don't have necessary to use blockchain because we don't we trust our providers, we trust our vendors. So this point of like full traceability and full decentralization was not something that they really needed. It was more cost worthy for them to choose AI data pipelines where they're using basically a single AI pipeline which connects all of their services in one place. So yeah, that was uh that was the root cause as far as I know.

Are they relaunching one too?

Sorry. Are they going to go back to the chain blockchain?

Uh, from my understanding they are currently using both of the services because it's very hard to discard an existing solution. I'm not sure if they're doing any enhancements right now as we are speaking. The last info that I have is like for from the past year on on their solution. I know that they had a strong collab with IBM cloud. I'm also more talking with IBM cloud about their solutions and exploring them for enterprises than speaking directly with Walmart.

Um do you have actual numbers because if I understood correctly um the main problem is that when you're building custom data pipelines across like different types of departments etc etc

all of them really basically eat your time eat development eat go to market time etc etc. Uh do you have like numbers about what are these what are the sums that these uh these factories the big these big players actually save by using for example a standard that yeah you have an EDM chain maybe a private one you just use indexers that are like open source and you can just get the data you use smart contracts that need to be written and then like maintain maintenance of it is like pretty pretty easy to do. It's like you have a boiler plate that basically can be applied to all data and then do do we have any numbers about like what what are the sums saved uh what does it cost them? Obviously, these are pilot projects and it's more like R&D expense right now, but compared to doing like or or like running this versus running all those custom data type data pipelines in between 17 different uh I don't know like CRM and that they use like

do we have any any data?

Uh I do have some data. uh I cannot disclose the actual numbers but I have a client I have a customer which is pretty big uh they have like a pretty complex supply chain they switch to a PC blockchain and suddenly yeah their cloud computing cost uh rose were rising but in the same time they managed to save operations around 47%. It's a estimate that was uh made on like after half a year of running the supply chain solution on blockchain

compare and it was a comparison between the past uh semester of running uh the traditional uh supply chain solutions that they were using before.

Okay. So it's actually cheaper.

Yeah, it's 47%. Yeah. But there's a big on boarding cost. you have to develop everything in house. uh because as you know there are very few companies which are offering a fully customizable solution on supply chain blockchain management solution and um yeah you have basically to build your own if you want something very specific custom tailored and that's the issue with supply chain you don't have like a lot of standards because every business is different every supply chain can look very very different from other supply chain And that's why you need something very specific, very tailored to your needs.

And usually the best approach is to build something on your own and just use providers where you can use providers.

So yeah,

like this this has been always like the black box for me because like if you would have standards, most of the cases are just abstracted away to the fact that like if you're actually manufacturing something, you get raw material in, you manufacture, you get product out. So I don't really understand why there are like so many complex things like why is it like a solution that actually does this in an optimal way. It's like it feels like us humans we are dumb that we're not able to actually create a system that works for everybody.

So I think the complexity comes the from the fact that there are a lot of vendors involved in the whole supply chain. You can have thousands of vendors and they can be globally and every vendor does some kind of an operation inside their business. They have their own standards. They have their own protocols. They have their own uh operation frameworks and workflows.

They have their own systems. And basically uh what happens is the following thing. you one of your vendors maybe is producing something very critical for your for your product like we have Taiwan which is producing microchips for April if Taiwan right now it's going to be in nowhere with China for example then boom you are most important vendor it's gone it's vanished and that is going to affect your entire supply chain like every geopolitical economically event can impact your vendor which can be mission critical for your product and from there comes the complexity. You you need to make sure that you always have a vendor available. You have to make sure that you always import only the raw materials that you're going to use.

You don't waste money. You don't uh have delays in the launch of your product and the in the production of your product. There's also forecasting going on. You need to forecast the demand in the next semester, in the next year because some products maybe take a day to be produced. But also there are very complex products like cars which maybe take years to be produced and basically because you need to fetch a lot of materials from like all over the world from different vendors.

You have to process them in multiple plants across the world where you are using different vendors. You have to manage your money and spend them wisely. You have to demand the needs of the customer and you need to do a bunch of forecasting to see if your business is going to be be viable in the next years with a bunch of data going on. Yeah, you you can have like a bunch of complexity and I think that's the main issue like it's very hard to tackle that because it's a big problem. It's a lot of data but this problem is not the same problem as other other companies which have supply chain supply chains across the world.

Yeah, I was I was expecting to to have like a consortium where people actually like representants from all these bigger companies actually gather and they create a supply chain standard.

Yeah, you have a standard it's called GSN1 which basically u tries to implement this. There's a global organization. It's an NGO which is not using blockchain but is trying to provide some data formats which should be used across the supply chain u life cycle just to be able for others to develop solutions which would ad to this standard and use the same same data format but the mini is the with IT operations basically because you don't have the bandwidth the capacity the resources is to implement something that would adhere to that standard and that's why I feel the need to have an external provider for these solutions which is going to develop him itself is going to be easy to tailor and launch