How AI and RWA are shaping the evolution of DeFi.

Claude Igienta, the driving force behind Mimo Capital, shared his thoughts on the current and future state of DeFi with BeInCrypto.

By integrating Real World Assets (RWA) and focusing on Artificial Intelligence (AI), Agienta's work promises to usher in a new era of decentralized finance.

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The plateau of real world assets

Cloud opens the discussion by reflecting on the direction of RWAs in the decentralized financial ecosystem. Initially, there was excitement when platforms like Ondo Finance introduced novel protocols, marking a new peak for RWA in DFi. However, the pace appears to have peaked, reflecting a landscape where the vast potential of RWAs remains largely untapped due to various market readiness and regulatory hurdles.

“It's a story that the AWA has been trying to happen for a long time. The big kick was when Ondo announced T-Bills in January: Centrifuge came early, but I guess they came when the market wasn't ready to hear about those things. From the perspective of the crypto bubble, it seems huge and has attracted a lot of attention. But if you take the two big players out of the equation and look at open protocols that have some interest from users outside of their respective founding teams, it's certainly shown.”

Despite these setbacks, Eguienta's outlook on real-world assets is not pessimistic. The DeFi community recognizes the plateau as a stage rather than a fixed state, suggesting that it is on the verge of more sophisticated RWA integration strategies. Beyond traditional assets, the company is exploring the tokenization of Bitcoin mining operations and AI data centers. For example, the complexity of Bitcoin mining has kept many interested. Simulating the operations simplifies the process. The same is true for AI: the traditional route through brokers, often leading to the idea of ​​investing in companies like Nvidia, felt inadequate for those seeking direct exposure to the financial benefits of AI. Recognizing this gap, Mimo Capital envisioned serving as a bridge, transforming from an alternative to a mainstream enabler of the economic ecosystem.

This change is not only about diversifying offerings, but also about aligning with the natural risk-reward profiles that appeal to the crypto community.

The overall goal of many statscoins representing RWA, like us, USK and others, was to provide the convenience and reward asset allocation of a stable coin. But it failed to materialize that way in the minds of consumers because the liquid convenience of a stable coin was never matched by any RWA asset, at least not yet. We researched the RWA scenario and realized that users in the crypto world were not looking forward to KYC and all that for a 5% yield. And the security that RWA brought was not talking to the people. Users who are willing to go through all this would prefer to register with a centralized exchange and go for multiples rather than single digit percentage profits. Now we are looking at very high products and risky investments that match what crypto enthusiasts really want.

AI: The Evolutionary of DeFi

One of the most exciting aspects of Eguienta's vision of the future of DeFi is the role of AI. From improving security protocols and user interfaces to enabling sophisticated financial modeling, the potential to transform AIA's definition is immense. Eguienta shared examples of how AI can provide decision-making support to users, facilitate audits and protect against fraud.

“I haven't personally tested these products, but Bunzz tries to help with modern contract audits, and Next Gem AI tries to help users' decision-making processes regarding security. These products are obviously young, but they clearly show the industry's desire to integrate AI.”

Mimo Capital is integrating artificial intelligence at multiple levels, reflecting an overall strategy to leverage AI for internal efficiency and product development. The company purchased specialized AI hardware, a decision based on Cloud's long-standing involvement in AI research and its proven benefits in mimo operations.

Recognizing the need for AI in various industries, Mimo has identified a unique opportunity. Many companies, from automotive manufacturers to tech startups, are looking to incorporate AI. This demand has led to a significant supply shock in the AI ​​hardware market, particularly for the high-end NVIDIA chips necessary to efficiently train AI models. Its strategic discovery enables Mimo to lease these few resources, creating a new product offering in AI hardware leasing.

co-pilot on board

In anticipation of a more integrated platform to showcase these offerings, Mimo developed a proprietary wallet. This wallet is designed to simplify users' interactions with DeFi investments, providing an easy way to manage portfolios across multiple blockchain networks. It aims to be a non-custodial, open source solution that supports a wide range of protocols beyond the Ethereum Virtual Machine (EVM)-compatible blockchains.

“We were like, this could be a really good product. And then we started thinking about where we could sell this. The first thing that came to our mind was KUMA, our main RWA platform. But we were also thinking about a broader product that should sell better. So to get on board, your We decided to bring DeFi positioning and a wallet where you could go and get a product. When we were building this wallet, we realized that it would be great to let people get on board with a multi-chain, non-custodial wallet, something that the industry should have been building for a long time, but we didn't. .A nice open source wallet that supports anything other than EVM.

This ambition has led to the development of a new wallet as a platform to explore the intersection of AI and finance, not just for the storage of digital assets. During the development process, an innovative idea emerged: incorporating an AI assistant designed to provide personalized financial guidance to users, analyzing their DeFi position and market situation and suggesting strategies that could be implemented.

Integrating AI directly into a wallet transforms it from a transaction management tool into an interactive advisor that can execute recommendations with one click. As an experiment, this initiative is approached with seriousness and openness to learning. It represents a dual effort to improve the crypto ecosystem by providing an AI-driven product while improving the user experience with the help of direct AI.

The path to supervisory involvement

The journey to mainstream adoption is fraught with challenges, particularly in the regulatory domain. Achieving regulation in one jurisdiction can provide a level playing field, but understanding how local regulation works globally is complicated. In addition to introducing traditional assets, entry into complex environments introduces additional regulatory complexities. Projects that aim to simulate real-world assets must navigate these regulatory waters while building trust in their platforms.

“If you want to go with something a little more complex than T-bills, you add a degree of control. Because you want to simulate real things and not necessarily somewhere you are trading in a legal protection framework. So you cannot use banking infrastructure as a backbone. You basically have to create some infrastructure to get things right and people to trust. Therefore, it is imperative that your auditors understand that the AI ​​data center you are using under warranty is secure. In our case, you should do the same for your Bitcoin mines. It's very complicated to say the least.”

Some regulatory bodies may respond by directly prohibiting such activities, in line with cryptocurrencies. Others may create regulatory frameworks or adopt a sandbox approach, allowing entities to operate in an ad hoc environment while monitoring results.

“This approach has been explored in Singapore and many other Asian countries and has been very successful. In contrast, the regulatory environment in the United States takes a very different approach. Legal entities are left to determine whether their activities are signed as securities, with the understanding that regulatory bodies may intervene if necessary. This is an uncertain landscape.” Positioning poses significant challenges for industry participants, making the US a particularly complex jurisdiction for RWA operations, with the exception of regions where cryptocurrencies are outright banned. Europe's regulatory landscape is more open and forward-thinking.

For example, Mimo has received a license to tokenize assets, indicating a progressive stance by European regulators. Interestingly, European regulators, including the Financial Markets Authority (FMA) in Liechtenstein, are rethinking their regulatory framework to adapt to new European-wide cryptocurrencies, which do not need to fully regulate the tokenization of real-world assets. This means that activities that were previously regulated may become unregulated – not prohibited but not monitored by separate regulatory authorities.

The main challenge is understanding what happens and where. Once you have control somewhere, what exactly can you do? How much can you do globally using your local code? Navigating this kind of framework was somewhat challenging, but that's the name of the game.”

The Future: Innovation and Education

Eguienta is optimistic about the intersection of DeFi, RWAs and AI. He noted that growth in the DFi sector tends to be driven by a fast pace, focusing on trending topics and investors rather than addressing fundamental issues or harnessing the full potential of the technology. The industry's reliance on venture capital influences, prioritizing projects that reflect successes, with new management cues backed by prominent VCs, reflects a cycle of imitation rather than innovation. Such tactics often serve as a testament to the industry's current limitations rather than its potential.

The shift towards reducing the costs associated with developing novel DeFi solutions enables more tangible innovation. Making auditing more accessible, simplifying the development process and lowering barriers to entry for developers, especially those armed with AI tools, can create a more innovative ecosystem. The complexities that real DeFi initiatives face create significant barriers to entry, which contrasts sharply with the typical rapid development cycles of a typical Web2 startup environment.

“The future of DeFi lies in our ability to innovate responsibly, educate our users and operate within a clear regulatory framework. The regulators have done their job. They have provided us with the regulatory framework, so we (as an industry) can no longer blame them. The institutions have done their job in many countries, and the banks have done their job. They are willing to open bank accounts for crypto companies, so we can no longer blame those people.