Founder of troubled crypto asset unicorn Babel launches new DeFi project, stablecoin

Image credit: Flex Yang, former CEO of Babel Finance and founder of the Hope DeFi ecosystem. Image: Hope

Flex Yang, the former CEO and founder of Babel Finance, is leading the effort to restructure the now-controversial unicorn of cryptoassets, while introducing a new decentralized project with hopes of avoiding some of the mistakes of his previous venture.

In light of the decline of centralized crypto services such as FTX, Gemini and Babel itself, Yang hopes that blending centralized finance (CeFi), decentralized finance (DeFi) and traditional finance (TradFi) to deliver the kind of transparency and security that comes with DeFi, but provides the ease of access offered by CeFi.

The project has a namesake, 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 may raise some eyebrows.

Yang compares Hope to MakerDAO, the issuer behind the popular stablecoin Dai, but with “a series of additional features.”

One of Hope’s protocols HopeConnect, for example, is a DeFi settlement and authentication application that allows users to trade derivatives within large centralized exchanges (CEXs) without depositing assets on CeFi platforms.

“It 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 launches today. Yang confirmed that while the ecosystem will start with investments from outside investors, he will personally invest $10 million from his own pocket to fund the Hope ecosystem.

Refinancing

Last June, institutional-focused crypto-asset manager Babel froze withdrawals and redemptions amid the market downturn, citing “unusual liquidity pressures.” Its financial woes 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 on protection with the Singapore High Court as it sought approval for restructuring.
Bloomberg reported, citing sources, that Babel planned to use revenue from its own stablecoin, called Babel Recovery Coin (BRC), to repay debts to creditors.

Commenting on the Bloomberg report, Yang said Hope will be staked by Babel but will not pay back creditors directly. Creditors would rather receive a BRC coin.

According to Yang, the team behind Hope, which is made up of former Babel employees, will receive 30% of the leveraged tokens (LT) with a four-year vesting plan. 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 rights.

Then, 10-20% of the revenue received by the team will go towards repurchasing BRC two years after Babel’s court-sanctioned restructuring, the founder added.

Betting on Hong Kong

A number of Asia-based crypto firms are rushing to ramp up activity in Hong Kong as the region signals its desire to be the next regional hub for digital assets. Although Hope does not plan to be part of Hong Kong’s stablecoin ecosystem, which includes efforts to create offshore yuan-pegged stablecoins, “riding the wave of the welcoming atmosphere and increasing regulatory clarity in Hong Kong, which frankly does it to one of the many ideal markets for Hope Ecosystem,” Yang said.

“Also consider 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 is a clear trend in Hong Kong, the global financial center, and we do not want to miss this opportunity to capitalize on Hong Kong’s renewed interest in supporting Web 3.0 innovations.”