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In the midst of a global pandemic and a looming economic crisis, a freshman at the USC Iovine and Young Academy has co-founded a cryptocurrency investment startup that’s leaving old financial models in the dust with an approach that gives back as much as it profits.
His name is Jai Bhavnani and the startup is called Rari Capital. Short for Ferrari, the company is going full speed with $95M in funding in the past few months alone. The startup uses innovative algorithms to help users (individuals, investors, and companies) invest their money in the nascent ethereum ecosystem. The process is not only safe and transparent, it’s also automated to yield high returns. Rari is part of a new wave of financial startups that are coming into their own following the lightning-fast growth of Bitcoin.
“Someone very smart came along during the 2008 financial crisis and asked, ‘Why do we trust anyone with our money?’” says Bhavnani. “Satoshi created a trustless system that is open source and anyone can use."
Satoshi is the alias for the anonymous person(s) who first developed Bitcoin in 2009 and helped prove that a decentralized currency (no government, nation, or individual controls its worth) could work. Bhavnani’s startup, among other companies, is putting the decentralized finance (DeFi) model to the test and coming up big. Already in the past few months, Rari Capital has grown to over $95 million in assets under management (AUM)*.
Rari's website features a direct portal to manage and track yeilds over time in real-time.
Now, Rari is now making a dramatic swerve into the charity lane with the release of their Autonomous Charity Machine, a system Bhavnani says will redistribute the startup’s profits into various charitable causes. So why are Bhavnani and Co. embarking on this bold endeavour?
“The world is literally in chaos and we'd like to make a contribution to move the needle towards a better world,” he says.
Help shape the future and improve people’s lives. It’s the classic worldview of walking and chewing gum at the same time, but with this innovative team of young entrepreneurs at the helm, the needle might not stand a chance.
For this interview, IYA gets into the passenger’s seat with Jai for an exclusive sneak peek of Rari…
In layman’s terms, how does Rari actually work?
Rari Capital is a decentralized pool of assets that autonomously rebalances the funds to ensure users are earning the optimal yield. What does that mean?
Essentially, users can deposit money into Rari Capital. These users can be anyone: institutions, individuals or even companies. The money that they deposit will take the form of cryptocurrencies. After they deposit, Rari Capital will automatically go and see where to redirect that capital to generate the highest returns. The system will look for new opportunities every thirteen seconds to ensure that it is always achieving the highest returns possible. For the past few month’s we’ve averaged 20% APY which has allowed us to grow to more than $95M AUM (assets under management).
Rari Capital is fully trustless meaning that it does not rely on me or my team to manage it. The technology is managed by our token holders, the $RGT holders. The formal entity, Rari Capital, is just one of many parties responsible for maintaining and proposing upgrades to the aforementioned technology. Because of our recent merger with Melon Protocol, we are soon going to be able to offer these services faster, cheaper and better.
How did you first come up with the idea for Rari?
One of my core beliefs is that the vast majority of people are coming to cryptocurrency and blockchain in general to make money, not for the decentralization elements. My previous company monetized on this wave; it was an exchange that monetized off of people’s drive to speculate on the market. One thing that I learned while working on that was that people are horrible at speculation and tend to lose money. After I left Ambo, I questioned, “Are there ways for people to make money within crypto without price speculation?” That was the vision behind Rari Capital.
My previous company was called Ambo, because everyone in the crypto-sphere wanted a Lamborghini or Lambo. I had to continue the trend so I decided to call this company Rari for Ferrari. Since we were working in finance to a certain degree, it needed to be more official so we appended it with Capital. That’s how Rari Capital came to be.
One would think that you’d have to have years of finance experience to jump into the DeFI and cryptocurrency space. How did you get involved and what’s unique about your perspective and experience?
My entrance to cryptocurrency came in early 2017 when a friend of a friend told me to dump all of my money that I had made from freelancing into a little known cryptocurrency called Ethereum. I immediately thought this was the stupidest thing but after lots of research, I started putting money in. Then the price started going up and I was instantly intrigued.
I learned more about the entire space and how it worked. Back then there were a bunch of what are now called “shitcoins” that were ballooning 1000% per day. I used my development background to build my previous company which enabled anyone to easily buy and sell these assets when they couldn’t be traded on the major exchanges. I then sold that company, Ambo, to a larger company called MyCrypto. Ambo wasn’t too deep into finance and during its inception I had a very limited understanding of finance at large.
I am still working backwards on understanding traditional finance--a truly painful process considering how horrible it is relative to DeFi.
Bahvnani previously worked on the startup Ambo, which was sold to MyCrypto.
For those of use who still carry cash, could you provide a quick lesson on cryptocurrency and why it’s the future?
When we think about cash, we often think about this piece of paper that we have in our pocket. But what does it actually mean? Once upon a time, it was tethered to a piece of gold under management by the United States. It isn’t any longer. Now, it is just a blind faith of trust in the United States government, specifically, the Fed. The Fed is composed of unelected leaders who have more power than most third world country presidents do. Now looking at history, the Fed has done a historically horrible job at managing the USD as a currency. Even now, during this pandemic, the Fed is willing to derail the entire currency (by printing more and more money...more money was printed in June 2020 than the two previous centuries!).
I could go on for ages about this, but the point is that I do not trust the Fed or the United States government at large to manage my money. They haven’t given me any reason to do so. I don’t want to deal with the consequences of the inevitable collapse.
TLDR: I’m short USD long BTC.
How do you juggle school, social life, and your startup?
Honestly, it is a lot of work. Sometimes it sucks to say no to hanging out with a friend when you have work to do. But it is so worth it when that work succeeds. I do end up procrastinating a lot, but communication makes it possible.
How has the pandemic affected your work on Rari?
Honestly, I’ve not run Rari any other way. Rari was founded at the beginning of quarantine and has never functioned in any other capacity.
We’re all familiar with stories of tech CEOs who leave college to start a business. Why do you think college is important and why the Academy?
I think that college is important because it gives students an opportunity to really explore their interests. I know for me that finance isn’t my end goal. I don’t want to be behind a trading desk all day. What is my end goal? I don’t really know. But I’m hoping that the Academy and USC in general will help me find out.
You recently announced Rari Capital’s Autonomous Charity Machine. What is that all about?
Essentially, it forwards all of our profits (as a company) into a charity, determined by our token holders. Estimations put our contributions to charity somewhere between $3-15M per year depending on the market environment.
The charity profits and the Autonomous Charity Machine will completely replace Rari Capital. All current strategies will stay the same and we will continue to earn our users profits, however, some may elect to choose greater fees for philanthropic reasons or for tax reasons. The money will be funneled into a DAF (donor-advised fund) which is controlled by our token holders who can then choose which charities receive what amount of money.