Flex Yang, the former CEO and founder of Babel Finance, is leading efforts to restructure the now embattled crypto asset unicorn while introducing a new decentralized project with hopes to avoid some of the flaws of his previous venture.
In light of the downfall of centralized crypto services like FTX, Gemini and Babel itself, Yang is touting Hope, which blends centralized finance (CeFi), decentralized finance (DeFi) and traditional finance (TradFi) to deliver the kind of transparency and security that come with DeFi but provide the easy access offered by CeFi.
The project has a namesake token, which aims to eventually peg its value close to the dollar as adoption grows. However, the Hope token will initially use Bitcoin and Ether as reserves instead of cash and cash-equivalent assets, which are favored by other stablecoins. The approach could raise some eyebrows.
Yang compares Hope to MakerDAO, the issuer behind the popular stablecoin Dai, but with “a series of added functionalities.”
One of Hope’s protocols, HopeConnect, for instance, is a DeFi settlement and clearance application that allows users to trade derivatives within major centralized exchanges (CEXs) without depositing assets on CeFi platforms.
“That means no CEX custody, no user credit risk, while bringing CEX trading experiences to DeFi. Users can access CEX liquidity in anonymous and decentralized ways,” Yang told TechCrunch in an interview.
Hope is launching today. Yang confirmed that while the ecosystem will start with investments from outside investors, he will personally invest $10 million out of pocket into financing the Hope ecosystem.
Refinancing
Last June, institution-focused crypto asset manager Babel froze withdrawals and redemptions amid the market downturn, citing “unusual liquidity pressures.” Its financial trouble came to light just a month after it announced its valuation had reached $2 billion in an $80 million Series B raise.
On March 6, Hong Kong- and Singapore-based Babel filed a moratorium of protection with the Singapore High Court as it sought approval for restructuring.
Bloomberg reported citing sources that Babel planned to use revenues from a separate stablecoin, called the Babel Recovery Coin (BRC), to repay debts owed to creditors.
Commenting on the Bloomberg report, Yang said that Hope will be staked by Babel but won’t directly repay creditors. Rather, creditors will receive a BRC coin.
According to Yang, the team behind Hope, which consists of former Babel staff, will receive 30% of leveraged tokens (LT) with a four-year vesting schedule. The team will lock all their LTs to vote escrowed tokens (veLTs) to govern Hope’s decentralized autonomous organization (DAO). As a result, they will receive the DAO’s revenue as part of their veLT’s rights.
Subsequently, 10-20% of the revenue received by the team will go toward repurchasing BRC two years after Babel’s restructuring sanctioned by the court, the founder added.
Betting on Hong Kong
A flurry of Asia-based crypto firms is rushing to increase activity in Hong Kong as the region signals its desire to be the next regional hub for digital assets. While Hope does not plan to be part of Hong Kong’s stablecoin ecosystem, which includes efforts in creating offshore yuan-pegged stablecoins, it’s “riding the wave of the welcoming atmosphere and increasing regulatory clarity in Hong Kong, which frankly makes it one of the many ideal markets for the Hope ecosystem,” said Yang.
“Also, take into account that the Hong Kong Dollar is essentially the world’s largest USD-pegged stablecoin, Hong Kong regulators know how these things work, and crucially, how to regulate such currencies,” the founder continued.
“There’s an evident trend in Hong Kong, the global financial center, and we’re not looking to miss out on this opportunity to tap into Hong Kong’s renewed interest in supporting Web 3.0 innovations.”