In cryptocurrency markets, it has been a torrid year.
Bitcoin and Ethereum are down over 70%. However, in the world of altcoins, it has been a lot worse, with many coins paring down well over 90% as the bull market hysteria came to an abrupt halt.
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Request Finance is one of those, the decentralised payment system whose native token is down over 90% from its peak. Providing invoicing services and other payroll solutions, it has shown even more volatility than normal recently. I interviewed Ivan Hong, Content Lead at Request Finance, to get an insight into how life has been for altcoins struggling against the wave of selling across the industry, and what Request’s plan is going forward.
Invezz (IZ): The Request token surged over 80% before plunging 40% earlier this week, and is now back to roughly where it started. Compared to previous highs, it is still down over 90%. Do you think the extreme volatility of the coin, and the relatively low liquidity, is a bad thing?
Ivan Hong (IH): Volatility is only a bad thing when one is talking about a stablecoin intended to facilitate the flow of value in an economy.
On the contrary, for investors of all stripes, volatility can only be a good thing. For investors that take a long-term view, volatility allows investors to accumulate a desirable token at their target prices. For short-term investors, volatility is indeed, the very source of profit.
$REQ’s volatility is, in fact, good for awareness and growth. It also suggests that investors of various convictions are beginning to take notice of what we are doing.
It is important to remember that Request Finance is an app built on top of the Request Network protocol. If Request Finance is successful, $REQ is going to be successful as well.
The token economics is designed so that increased usage of the Request Network decreases the token supply. All things being equal, this should increase the value of the $REQ token in the long run.
Request Finance contributes to the decrease in $REQ supply, by accelerating the Requests for payment on the network. It had hit nearly $250 million in total payments volume since launching in January 2021.
We hope that Request Finance’s consistent, often double-digit monthly growth demonstrates to other builders the value of building other applications on top of Request Network.
The team is constantly improving the app and making it more user-friendly. Recently, Request Finance launched an escrow feature using smart contracts for crypto payments to make user funds more secure.
IZ: As someone who bills my work every month, I am very familiar with the invoicing process. How exactly would Request make it easier, and what advantages would it have compared to similar processes domiciled outside of the blockchain? What exactly does the blockchain help with?
IH: The difference is night and day – especially if you do business globally. I understand that Invezz.com is a global company, and also has many freelancers that invoice your company in crypto.
How are those crypto invoices managed today? Typically, they are PDF files sent via email. This creates all sorts of administrative headaches.
Firstly, there is the issue of payments. Most companies have a spreadsheet containing lists of wallet addresses on one column, and names on the other. They must manually copy the payment information from either the PDF invoices, or this spreadsheet when paying the invoices. This is time-consuming, and incredibly prone to human error.
In Request Finance, all wallet addresses are linked to names and emails. There is no chance of paying the wrong amount or to the wrong person. With our batch payments feature, you can also review, approve, and pay hundreds of different wallets, in different tokens in just three clicks.
Secondly, there is also the issue of finance operations. With Request Finance, you can spare yourself the endless back-and-forth of unnecessary communications between freelancers and your company’s finance department.
You can schedule recurring invoices for monthly billing. Or automate email reminders to chase upcoming, or late payments due. You can also enable email notifications to let everyone know when their invoices have been sent, rejected, accepted, or paid on-chain.
But wait – there’s more. A common nuisance companies experience with invoices is that mistakes sometimes occur with the wrong billing information like the company’s name, Tax ID, or address. This can cause needless delays in processing payments.
Our “InvoiceMe” feature allows you to send your freelancers or contractors a QR code or link. This will automatically create an invoice that’s already pre-filled with your business information. They will just need to fill out the rest of the invoice. Now anyone can invoice you correctly in just a few clicks.
Thirdly, there is the issue of bookkeeping. The PDF files all come in different layouts, which must be manually downloaded, properly named, and stored into files. Their data must be extracted, compiled, and uploaded into some bookkeeping or accounting software like Xero. But how do you account for the historical exchange rates of invoices denominated in volatile cryptocurrencies, or even fiat exchange rates? What about gas fees?
All of this is automated in Request Finance. You have a single clean dashboard where you can see all your invoices in chronological order, filter by names, addresses, or payment status. All this data, including historical exchange rates and gas fees, can be easily exported to tax or accounting software in a few clicks.
IZ: I have been paid in crypto before, which was a seamless experience carried out by sending my wallet address to my employer. Where does Request fit into this process?
IH: Request Finance is designed to meet the operational and compliance needs of enterprises. The easier it is for them to manage hundreds of freelancers like you, the less likely they are to make mistakes, or face delays when paying you.
But there are also benefits to you as a freelancer or contractor getting paid in crypto.
It helps you simplify the billing process. You can automate recurring invoices for billing your clients monthly, weekly, or even on a streaming basis. Or schedule email reminders to chase upcoming bills, or even late payments past due.
It also lets you know when you have been paid. You can also enable email notifications to let you and your clients know when your invoices have been sent, rejected, accepted, or paid on-chain.
Lastly, it serves as a deterministic proof of income. Suppose you receive a call by law enforcement agencies, suspecting you of laundering money for an international scam ring. Or the tax authorities accusing you of unlawful tax evasion. Sending them your Etherscan wallet history does little good.
This has already happened to several of my colleagues working in crypto. Unfortunately, they had to endure the inconvenience and fright of hours of interrogation, and having their assets frozen before finally being declared innocent after several weeks.
The pseudonymous nature of crypto wallet addresses, and the long alphanumeric strings of transaction hashes are ill-suited for financial reporting, or calculating tax liabilities.
But with Request Finance, all this is documented easily, and in a human readable format. All wallet addresses are also linked to real world identities in a deterministic manner. There is almost no chance that a wallet, or payment is mislabelled by accident.
IZ: What is the thinking behind the Request native token? Could the service exist without this?
IH: The $REQ token was designed to facilitate transactions across the Request Network ecosystem in several functions:
- Anti-spam: The transaction fee charged on every request discourages malicious network usage, mitigating spam. Without spam transactions, network performance is better, improving the user experience (UX).
- Governance: The Request Network is a decentralized protocol that utilizes an off-chain governance structure. Participants can vote on critical decisions that impact the network’s long-term success through this mechanism. The project team plans to introduce an on-chain governance structure parallel to the development of a decentralized autonomous organization (DAO). Under the overhauled governance structure, the $REQ utility token will be necessary to cast votes.
- Deflation: The transaction fees charged to users accumulate in an Ethereum smart contract that forms the basis of a deflationary mechanism for the $REQ crypto supply. This mechanism helps stabilize the value of the $REQ token by reducing the circulating supply.
- Staking: Users can stake $REQ tokens on Bancor in a single-token liquidity pool that provides impermanent loss protection. In addition, Request plans to introduce an internal staking concept for node deployment. In other words, by staking $REQ, users can operate a node that provides their end-users with a more streamlined experience.
- Discounts: $REQ crypto holders can receive discounts on products when they become available.
- Independence: The $REQ token allows the Request Network to operate simultaneously on multiple blockchains — or its own dedicated blockchain. $REQ is built to be an interoperable utility token that migrates without negatively impacting network performance. As a result, network performance is independent from both the token and technical infrastructure of its service providers.
IZ: There are many crypto startups which work in similar areas. How competitive is this area, and how many do you think will ultimately survive this bear market?
Competition is a good sign. It indicates that many people think an opportunity is worth pursuing. New entrants are always free to enter the space, and legacy players too, may decide to compete in this arena by acquiring crypto startups like us.
But I think earning users’ trust is perhaps one of the hardest things to do for enterprise SaaS companies. The CFO of a larger crypto company that processes millions of dollars each month is hardly going to be convinced to try out a side project, with no assurance of customer support when things go wrong, or the ability to support new feature requests, integrations, or continuous improvements.
Request Finance is very well-capitalized, with large, well-known users like The Sandbox, Decentraland, Aave, and others – many of whom are also our backers.
The reality of any free market is that most will not survive the bear market. Just look at all the failed dotcom hopefuls from the 1990s. But I also think that those like us who continue to build in the bear market and can demonstrate continued growth despite adverse macroeconomic conditions are well-positioned.
IZ: The bear market has obviously been brutal, with prices across the board collapsing. Do you think that coins such as Request can rebound while the macro environment continues to worsen, or will this be a long-term rebuild contingent upon the wider economy (and crypto) recovering, as well as Request continuing to evolve?
IH: If I could tell you with any certainty where the price of any token was headed, I am either a genius, a fraud, or a fool! I make no claim to the former, and certainly not the latter.
There are many determinants of token price, so numerous and complex in their interactions that the price movements might as well be characterized as largely stochastic.
Those seeking to profit from short-term positions must do so with extreme caution, making sure never to deploy more capital than they can afford to lose. It is certainly not impossible to profitably trade altcoins this way. But the vast majority of casual investors will lose money in the delusion that they can.
Generally speaking, most people should take a long-term view of projects, and evaluate their merits on the basis of fundamentals in as rigorous a way as possible. There are many models of valuation ranging from the traditional to the esoteric. We believe that is why we currently have a good number of Tier 1, global venture capital funds throwing offers at us.
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