Category: Think Pieces

During the holiday season, I spent Christmas playing golf with my old man and my not so little brother—a tradition we cherished back in my high school and college days, though less frequent now. Our family used to gather for dinner daily, but with everyone caught up in weekday and weekend commitments, those moments have become rare. My brother, pursuing a law degree at Universitas Indonesia, has followed my footsteps into the realm of competitions, while I delved into equity research, he opts for moot court competitions, filling his days sometimes even to weekends.

The scorching sun failed to deter over 50 golfers from joining us on the course that day, with more than four flights ahead of us, slowing our pace. Surprisingly, this delay allowed us to engage in more conversations, a silver lining despite the temperature reaching 35 degrees. Exhausted as we appeared, our caddies, Lydia and Sari, kindly offered us a taste of the variety of food they had on hand—a mini-market on wheels. Jackfruits, rujak, batagor, siomay, iced tea, and more – a tempting array. I couldn’t help but think, “Ah, the impulsive spender,” wondering if they were avid Shopee or TikTok users.

Thus, began my inquiry into the eCommerce habits of our caddies on the 7th hole. Lydia and Sari, Shopee enthusiasts, favoured it primarily for ShopeePayLater, aiding them in managing their monthly cash flow. Interestingly, when it came to TikTokShop (TTS) and Shopee, they leaned towards TTS. Their rationale? Spending 4-5 hours daily on TikTok, they appreciated influencers seamlessly incorporating product details in their videos, creating an impulsive consumer experience. These purchases vary from cute dresses, kitchen equipment, beauty products (make up, micellar water, eyelash and brow pencils), even food and snacks.

The financing aspect emerged as a significant factor. They revealed that paying in bulk at the end of the month suited them. Spending around IDR 1-2 million monthly, which accounted for a substantial portion of their assumed monthly income of IDR 6-8 million,  made up 10-30% of their earnings. When asked about credit cards, Lydia and Sari found the idea daunting, fearing hidden fees. According to Sari, the fees for their current Paylater service were minimal (which is probably not the case, as it accounts for 5-10% of loan taken). Interestingly, Paylater limit amount also acted as a status symbol – When Sari said that her Shopee Paylater limit was IDR 12 million, Lydia proudly stated  her IDR 17 million limit, emphasising her timely payments.

Curiosity led me to ask, “Are you eagerly awaiting a Paylater option for TikTok?” Their response was a resounding “Of course!” They believed it could be a game changer – a no brainer reason to change to TTS.

Wow I thought. Imagine potentially prompting a massive migration of Shopee and Lazada users to TTS. The prospect of doubling GMV to USD 12 billion suddenly seemed conservative. Perhaps GOTO had struck gold with this collaboration, I mused.

While I pondered these eCommerce dynamics, my dad achieved something equally remarkable – a Birdie! We are mere 20-30 handicap golfers, this is a big deal for us. Distracted momentarily, I returned my focus to the game.

But really, the GOTO and TikTok partnership was probably akin to an Albatross or, at the very least, an Eagle .

 

Danzel Aryo Soerjohadi

Investments at Heyokha Brothers

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“Is artificial intelligence making us dumber?” This is a question that has been on many people’s minds as generative AI continues to grow in popularity. With its applications in fields such as music, art, and healthcare, AI is poised to change the world in exciting ways. But there are also concerns about its impact on human intelligence and critical thinking.

One of the primary concerns is that relying solely on AI-generated content could reduce opportunities for developing original ideas. For example, if individuals solely rely on AI-generated news articles for information, they may not be exposed to diverse perspectives and may have limited opportunities for critical thinking and independent analysis. Similarly, if artists solely use AI to generate their works, they may not be challenged to come up with original ideas and may become less creative over time.

 

On the other hand, proponents of generative AI argue that it has the potential to enhance human intelligence and drive innovation. To get a better understanding of this perspective, we sat down with Dr. Sarah Kim, a computer scientist and researcher at the MIT Media Lab. According to Dr. Kim, “AI has the ability to process massive amounts of data at speeds that are not possible for humans, leading to more informed decisions and new avenues for creativity.” She goes on to say, “AI-generated content can also serve as a starting point for human artists, inspiring them to create something truly unique.”

In conclusion, the use of generative AI presents both potential risks and benefits. It is up to us to ensure that this technology is used in a way that promotes the advancement of humanity while avoiding negative impacts on human intelligence and critical thinking. Whether AI makes us dumber or not ultimately depends on how we choose to use it.

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ChatGPT, the generative AI model created by OpenAI, has caught our attention lately, and probably yours too. The tool has taken the internet by storm since its public launch for its ability to generate text that is coherent and appears to be written by a human. Our curiosity piqued, we just had to try it out for ourselves and see the extent of its capabilities. And guess what? This very article that you have just read was generated by ChatGPT (with our inputs).

We began the process by asking ChatGPT one question: “tell me two reasons why generative AI makes us dumber and two counterarguments”. Getting answers from ChatGPT is straightforward and easy but getting the answers in a desired format and style is less so. But with a little trial and error, we were able to get some pretty impressive results. It is important that describe your requests as detailed as possible to generate the answer you wanted. For example, we asked ChatGPT to suggest a clickbait title for us, we also asked it to add a short interview with a computer scientist to support the counterargument, especially with credentials and a professional name to make it convincing. However, we did notice that with multiple requests, the tool could forget some of your previous requests. So, would it make us dumber? It depends, depending on how you use the tool, I think the above article made a sound argument.

However, a more threatening concern that we wanted to highlight through this experience is how generative AI can create false but convincing information or ideas that can influence one’s beliefs and opinions. For instance, the computer scientist and researcher at the MIT Media Lab, Dr Sarah Kim, “we” interviewed does not exist, it is merely an identity invented by ChatGPT upon our request. Similarly for the image, it was created by DALL-E, the text-to-image model developed by Open-AI, with a text description suggested by ChatGPT so that we could create an image of Dr Sarah Kim that fits the context of the article. If misused, the spread of misinformation and false narratives can lead to dangerous consequences such as political propaganda and manipulation.

Surely the tool still has its limitations and biases, but overall, we are very impressed and amazed by its ability to take requests and return valuable outputs almost instantly. But while generative AI can bring many benefits, it’s important to keep in mind its potential negative implications and to always utilize the tool responsibly.

We end this blog with a rap song written by ChatGPT.

Verse 1:
Generative AI’s the latest buzz,
ChatGPT’s what everyone does.
A tool so smart and oh so fast,
Gives us answers that’ll last.
But is this technology so great,
Or will it lead to our cognitive fate?

Verse 2:
We tried it out, we put it to the test,
To see what answers it could suggest.
With a detailed description, it delivered,
Results that left us quite a shiver.
But beware, it’s not all sunshine,
Misuse can lead to false narratives, refine.

Outro:
Surely the tool still has its flaws,
But overall, we’re in awe.
Generative AI, it’s a thrill,
Just use it responsibly and all will be still.

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Last week may mark the worst week in history to date in the crypto industry. The downfall of FTX, which was considered as one of the biggest and most reputable players in the market, has stunned all crypto owners.

What was discovered?

Concerns for FTX’s liquidity spurred after the release of CoinDesk’s investigation on the close ties and blurred financials between FTX and Sam Bankman-Fried’s (SBF) trading firm, Alameda Research. It was revealed that Alameda Research held a position worth over $5 billion in FTT, the native token of FTX. It owned $3.66 billion of “unlocked FTT” and $2.16 billion of FTT collateral, combined making the biggest single asset held on its balance sheet. The report revealed that Alameda’s investment foundation was also in FTT, rather than an independent asset like a fiat currency or another crypto token.

An excel file FTX shared with prospective investors before the bankruptcy, providing a detailed picture of the financial hole in the FTX crypto empire.Source: Financial Times

On Nov 6, Binance, the world’s biggest crypto exchange, announced that it would sell its entire position in FTT tokens, worth over $500 million at the time. Unsurprisingly, FTX experienced a bank run following the announcement with customers demanding $6 billion of withdrawals. The value of FTT fell by 80% in two days.

Binance gave a short-lived promise of rescue on Nov 8 after corporate due diligence prompted concerns about the mishandling of customer funds. Having lent more than half of its customer funds to Alameda, it is reported that FTX has a shortfall of US$8 billion on its balance sheet.

A major failed experiment?

Some may say that this fallout has destroyed all confidence and set the industry back again in the eyes of regulators and institutional investors. To us, the cause of the meltdown is simple, those who have been in the financial industry will know, asset-liability mismatch, period.

The clear lack of corporate governance has contributed to the non-existence of risk management at FTX. As reported by the Wall Street Journal, Ryan Salame, co-chief executive of FTX Digital Markets, and Ryne Miller, general counsel of FTX’s U.S. arm, alongside other FTX employees, had no knowledge of FTX’s problems until exposed by the media, despite worked closely with SBF. The lack of transparency and seemingly concentrated control in the founders’ hands are disconcerting.Source: The Information

World frustrated

FTX suffered a $400 million hack which occurred on the same day the firm filed for Chapter 11 bankruptcy protection in the U.S. The internet was flooded with speculations that the hack could have been coordinated by insiders. The attacker appears to have “had access to all the cold wallet storages which he exploited,” Dyma Budorin, co-founder and chief executive of blockchain security auditing firm Hacken, said on Monday in an interview with CoinDesk TV.

Some of the wallets are labeled “fucksbf” and “fuckftxandsbf.eth”, which could be a reverse optics to appear as if it is a hack.

More pain to come

Similar to the Luna fiasco, we would expect a domino effect from the fall of FTX given the number of businesses in the ecosystem that are linked to the exchange. Genesis Global Capital has become the latest fallout from the FTX meltdown, reflecting a sign of contagion outside of BlockcFi, which is reportedly preparing for a potential bankruptcy filing.

Credit: Kyle Kim/Bloomberg

What to trust going forward?

Although it’s an extremely painful lesson to learn, individuals will now understand the importance of being their only owner of one’s digital assets. Crypto users are rushing to take control of their digital assets in the wake of the exchange’s collapse.  This will be better off for the market as a whole in the long run, to achieve the holy grail of decentralization, rather than being dependent on the notoriously centralized exchanges.

Indeed, there is evidence that crypto owners are increasingly moving to hardware crypto wallets. A major hardware wallet provider, Trezor, has recorded a major uptick in wallet sales in the aftermath of the FTX contagion. According to Josef Tetek, the firms’s brand ambassador Josef Tetek told Cointelegraph on 15 Nov, Trezor saw its sales revenue surged 300% week-on-week and it’s still growing.

And despite sell-offs, decentralized exchanges (DEXs) and decentralized finance (DeFi) platforms have been functioning smoothly and experiencing a double digit increase in the number of users in the past week. According to data share by Nansen to The Defiant, MakerDao, DeFi’s largest protocol with $6.5 billion of total value locked, has increased addresses by a third in the last week. And other top 10 protocols have also attracted huge jumps in users, with Aave notching a 70% increase, and a 63% spike for Curve.

Regulations are clearly needed for CeFi

The crypto community continues to learn the lesson of decentralization the hard way in the previous months. From Celsius Network to BlockFi, Voyager Digital, and now FTX, and probably more casualties to come, these are all centralized exchanges and financial platforms (CeFi). Similar to the situation of the 2008 falls of some of the largest American banks, we witnessed the consequence when market players under-collateralize and take risks with consumer funds. The only difference this time is that there is no government backing in the CeFi world, the CeFi companies are left to play out by themselves.

The collapse of FTX will spur more calls and urgency for crypto regulations. Both CFTC and SEC are experts in regulating the financial markets. What the regulators have essentially been trying to do is to replicate the regulatory framework for the traditional financial (TradFi) market to the crypto market, at least for CeFi, which would be challenging. The Federal Reserve took six years to create after the 1907 Wall Street panic, so it will not be surprising if it takes few years to come up with the regulations for CeFi.

The flaw in CeFi is that the reliance on trust that Satoshi Nakamoto was trying to avoid has been reintroduced. The collapse of FTX once again reminds us of the importance of decentralization. DeFi platforms are designed to preserve transparency and self-sovereign custody of assets. Regulations that do not overprotect those with an upper hand could be beneficial for the industry. Although unclear with the approach yet, we believe the crux of regulating decentralized projects would be to regulate on a protocol level rather than on an entity level. Nonetheless, the ultimate solution remains to leave governance in the hands of consensus mechanisms.

The meltdown of FTX was a failure of CeFi, not DeFi. If there is a silver lining for the FTX meltdown, it would be to redraw the ecosystem’s focus on its original purpose of decentralization, reaching consensus on who owns what cryptographically across nodes rather than relying on a central source of trust.

 

 

 

Reference

Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet. CoinDesk.

CZ Strives to Show Binance is Different From FTX. The Defiant.

FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall. The Wall Street Journal.

FTX’s Collapse Leaves Employees Sick With Anger. The Wall Street Journal

Trezor reports 300% surge in sales revenue due to FTX contagion. Cointelegraph

FTX balance sheet, revealed. Financial Times

FTX Hack or Inside Job? Blockchain Experts Examine Clues and a ‘Stupid Mistake’. CoinDesk

FTX’s New Boss Reveals Chaos Left Behind by Bankman-Fried. Bloomberg

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The disturbing almanack

In the past, that is not too distant was a decade of abundance, peace, and order. Food, energy, resources, and capital were plenty and affordable if not cheap by today’s standards. Today, we have the exact reverse.

Six months ago, we wrote about the rising food security risk globally (link). Since then, food prices have cooled down in the wake of recessionary fears driven by the global central bank tightening cycle. The FAO food price index has fallen by 14.7% in USD terms from its peak in April 2022.

The question: is the food security risk now no longer a concern?

Anecdotal evidence of the rising popularity of food-protectionism measures would suggest the contrary. In 2H2022, Malaysia banned chicken export, India restricted the export of rice, and recently Mexico halted 24 key food exports.

Furthermore, the recent surge of the US dollar actually has worsened the food security risk for many countries. At the same time whereby the FAO food price index fell by 14.7 percent from its March 2022 peak, the dollar index rose by 21.5 percent. This means that most countries experienced a 3.65 percent higher food prices. It was no relief.

Furthermore, we still identify three major supply-side overhangs for food security: (1) the high possibility of a third consecutive La Nina; (2) escalation of political risk in Europe; (3) gas-crisis-driven fertiliser cost.

While the almanack that we provide might feel disturbing if not stomach-churning, we think that the mounting pressures of food security could signify the value of food technology. A vertical that has perhaps been taken for granted in the decades of plenty. Ironically, it is also the sector that allows humanity to thrive and defy the infamous Malthusian catastrophic prophecy.

Malthusian prophecy and its 180-degree reality

Students of economics would have been familiar with the Malthusian Trap. The 18^th-century British philosopher and economist Thomas Malthus was well-known by the history book for his grim prediction in 1798. Malthus argued that food production will not be able to keep up with the growth of human populations. As a result, disease, famine, war, and calamity are seen as humanity’s inescapable fate.

Proponents of this school of thought might resort to an extreme solution to this problem like extreme population control. This reminds us of Thanos, the villain of the Marvel Universe, and his conquest to wipe out one-half of the universe’s population to maintain prosperity and peace in the galaxy.

Fortunately, the reality has fared better than the doomsday prediction. Humanity has prevailed and continued to expand the frontiers of welfare. For instance, Our World in Data showed that life expectancy has more than doubled from 29 years old in the 1800s to 71 years old in 2015. At the same time, the global population went up sevenfold from about 1 billion to 8 billion in 2022.

Moreover, data from the 1820s to 2015 suggests that the poverty eradication curve is getting steeper rather than flatten. The share of the global population that lives in poverty plunged from over 94 percent in 1820 to 9.6% percent in 2015.

These are signs that indicate the world’s productivity has exceeded the growth of the population. What went different from Malthus’ view?

The uncounted factors that matter: the man-made miracles

Robert Malthus’ theory of growth lacks respect for the fundamental reality of technological progress. This is implied by assuming that food production would only be growing at an arithmetic progression. In reality, innovation and technology have pushed the boundaries and changed the course of history. Especially in the front of productivity.

Three foundational food production technologies allow the humanities to dodge the Malthusian trap:

1. Fertilizers

One of the cornerstones of modern food production lies in ammonia which contains nitrogen and hydrogen. Nitrogen is one of the most important crop nutrients, a secret sauce of yield improvement. Ammonia can effectively bind nitrogen to be applied directly on crops or to be processed further for fertilisers like urea, DAP, and NPK.

The advent of haber-bosch process in 1908 allowed the synthetic production of ammonia. ­It is a game-changer and worthy to hold the title of one of the greatest inventions of the 20^th century. Erisman et al. (2012) estimated that the existence of nitrogen fertilisers have helped to feed 48 percent of the global population in 2008. In today’s number, that is equal to 3.8 billion people.

Back in March 2022 blog (link), we discussed ammonia as the main feedstock of fertiliser was caught in a perfect storm of geopolitical conflict, energy crisis, tight agricultural market, and supply chain constraint.

So far, we see a minimum disentanglement of these factors. As such, that might keep ammonia prices at elevated heights for a long time. Note that fertiliser crisis could cause a decline in the harvest that will worsen the global food stock.

2. Seeds technology

You reap what you saw. Seeds technology plays a vital role in fulfilling global food needs mainly through variants of better vigour and productivity.

In the case of the US, seed technologies have played an enormous role in jacking up the corn yield from merely 2 tons per hectare to 12 tons per hectare, a six-fold increase. This is a perfect showcase of what 160 years’ worth of long and continuous research effort could bring, defying the Malthusian trap.

In that regard of such immense research effort and multi-billion research budget, we perceive seeds technology businesses to be something secular whose profits are beyond justifiable for society. Their business enhances the economics of farming and helps feed the world in the process.

The advent of gene editing technologies (CRISPR) and super-computer could expand the frontier of seed technology in form of genetic modified organism (GMO) and genetic-edited (GE) seeds. Recent article from Financial Times (link) reported that gene-editing using CRISPR technology could cut product development cycle (variety development including regulatory approval) from 16.5 years to 5 years and research budget from $115 mn to $ 10.5 mn per product. Compared to GMO, gene editing using CRISPR is more precision in terms of adding or cutting the gene. Nevertheless, the technology mastery is still limited to a few and still in due process for more regulatory acceptance. Genetic-edited crop is the new unexplored frontier.

3. Crop protection

Besides fertilizers, the development of chemicals in crop protection has also contributed to feeding the world. For instance, pesticides could improve crop quality and increase crop yield by 30 percent on average (Bromilow, 2005). Pesticides are not something new, it has been widely used since the last 1940s.

Unfortunately, most crop protection products also require petrochemical-based feedstock. This suggests that a severe and prolonged energy crisis could adversely impact global food security by affecting the affordability and availability of fertilisers and crop protection chemicals. From that point, a vicious cycle in global food security could emerge from the subsequent decline in crop yields.

A difficult but hopeful journey ahead

It has been an adage of the investment world to invest in the pain points. Crop solution companies are essentially the direct solution to the looming food security risk. These companies range from fertilisers, seeds technology, and crop protection chemicals.

Given the R&D barrier of the business and the deeper pockets of the farmers, crop solution companies would be one of the few businesses that can thrive in this era of inflation. Crop solution companies’ pricing power is bound to rise in times like this. It is pretty obvious since crop solution products are the must-have ingredients for farmers to extract the risk premium and the cure to the crisis itself.

Although the short-term outlook might be difficult, the long story of humanity would suggest that this is a beginning of a hopeful tomorrow. Today’s market risk premium unveils the challenges and opportunities that lie ahead of us. It’s been years since capital was substantially directed toward resources, the bedrock of civilization. We believe persistent commodities’ risk premiums will redirect the capital into sectors that become the seeds of the next decade of plenty.

 

Bibliography

Bromillow. (2005). Pesticides. Encyclopedia of Soils in the Environment, Vol. 3, Elsevier, 188-195.

Ritchie, Hannah;. (2017, November 07). How many people does synthetic fertilizer feed? Retrieved from Our World in Data: https://ourworldindata.org/how-many-people-does-synthetic-fertilizer-feed

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The aftermath of Luna and its stablecoin TerraUSD is no doubt more devastating than one would have imagined. The fallout reminded us about financial crises and how leverage could be a detrimental double-edged sword: while your investment return is maximised, so is your risk. In this aspect, DeFi is no difference than TradFi, but the mechanism, hiding behind all the ‘smart contracts’, is much less understood. We try to explain what happened and the implications in this blog.

The domino effect of the Luna fiasco began as Celsius, a cryptocurrency lender, froze customer withdrawals on their platform in mid-June and subsequently declared insolvent. On that same day, Binance, one of the largest crypto exchanges, also halted withdrawals from their exchange for a few hours before resuming them later in the day. While all eyes were fixated on the crypto lenders and exchanges, few noticed the looming of a bigger victim.

Singapore-based crypto hedge fund Three Arrows Capital (3AC) transformed into an almost exclusively crypto focused fund in 2018, 3AC initially focused on trading Bitcoin and Etherum in the derivatives markets. Over the years, 3AC has diversified its investment strategy and has become a force in DeFi by backing some of its most important platforms. It has invested in Solana, Ethereum, Avalanche, Aave and Terra, as well as GameFi names such as Axie Infinity and NFTs.

Being one of the largest investors in Luna (seeking for its attractive staking yield), 3AC suffered large losses on the back of its collapse. Industry report said that 3AC has bought 10.9 million locked LUNA for $559.6 million, which by June 2022, was worth $670.45. The firm failed to meet margin calls from its lenders as the market was facing massive selloffs, triggering unforeseen liquidations for the firm.

Source: @FatManTerra, Twitter

The chain effect of 3AC’s insolvency has led to multiple crypto lenders halting withdrawals from their platforms. Amongst the sufferers is Voyager Digital, which wears the broker, custodian, and lender’s hat at the same time. The demise of 3AC, which was one if Voyager’s biggest borrower, has ultimately led to the firm filing bankruptcy shortly afterwards.

The Money or Cryptocurrencies Flow Chart

But there can be more domino effects along the way as the complicated relationships reveal themselves through the epic centres of Terra and 3AC.
Source: Coindesk, Bloomberg Intelligence, Three Arrows Capital, Heyokha Brothers

Source: Q2 2022 Cryptocurrency Report, CoinGecko

Lessons learnt

What happened in this collapse echoed past financial crises. The dependence on assets that were overvalued or at massive risk of large price corrections, and more importantly, the greed and fear that overtook the market players, have been the same forces at work this time round. Greed led 3AC along with other crypto lenders to misjudge systematic risks and entered highly levered positions in assets the values of which are highly correlated with each through engineering supply and demand. So when one falls, all have brought to their knees.

Not only is this poor risk management, but also a reflection of the opaque world of DeFi (that can also be said for TradFi). Like any centralised crypto fund, 3AC does not share much about its inner workings, this means that market participants have no insights as to where, when and how these funds invest and leverage. For instance, the Monetary Authority of Singapore (MAS) has reprimanded 3AC for misleading information and exceeding asset under management (AUM) threshold. The fund’s asset holding was estimated range between $4-10bn, which exceeded more than 22-fold the permitted AUM of SG$250 million under its status as a registered fund management company (RFMC).

Bringing transparency to crypto market

All the events contributed to the crash reveal just how opacity could lead to massive losses for consumers – two trillion dollars of crypto asset’s market cap have been wiped out. As a result, a call for consumer protection is crucial, and decentralisation could be a solution to the problem. The crisis occurred over the past few weeks tell us how reckless some institutions can be in pursuit of high returns. As a result, a call for consumer and investor protection is crucial, and decentralisation could be a solution to the problem. Decentralisation, such as a decentralised fund, offers market participants transparency. Imagine if everything is run on-chain with real-time reporting, meaning anyone can audit and analyse these funds anywhere, at any time, would fund managers continue to take on huge risks? Or would investors have pushed back on some of the risks had they known? Transparency mitigates moral hazard, it allows the market to differentiate high quality from low quality, effectively imposing self-regulation to the market.

Regulations spell the end of algorithmic stablecoin

In the wake of the catastrophic collapse of TerraUSD (UST), hedge funds and crypto lenders, one after the other, regulators are now in a sprint to formulate regulatory frameworks, particularly for stablecoins. For instance, just three days after 3AC was ordered to liquidate, EU officials secured an agreement on the Markets in Crypto-Assets (MiCA) proposal which covers issuers of stablecoins, as well as trading venues and wallets where crypto-assets are held. Under the new rules, stablecoins will be required to maintain sufficiently liquid reserves to meet redemption requests in the event of mass withdrawal. The stablecoins will also be supervised by the European Banking Authority (EBA). This law implies the consensus that algorithmic stablecoins are the weakest among the four types of stablecoins we discussed in a previous blog post (link). For fulfil the requirements under the new law, algorithmic stablecoins will require legal tender backing. Despite a bumpy road ahead, we see the new rules as a positive movement overall, not only does it provide regulatory clarity and assurance, but also lowers the risk for abuse. Indeed, following the agreement, Shiba Inu and Aave both announced their plans to launch a stablecoin for their respective ecosystem. This shows that effective regulation is paramount.

Defi will evolve, but it will not go away

We have long been a proponent that it will be years until Web 3.0 or crypto economy to truly take off. What we are currently observing are many proofs of concept. Therefore, there are bound to be successes and failures along the way. The crypto winter we are facing now may be the perfect opportunity to clear the underbrush that could be kindling for the next firestorm.

Reference:

MAS Reprimands Three Arrows Capital for Providing False Information and Exceeding Assets Under Management Threshold. Monetary Authority of Singapore.

Crypto hedge fund Three Arrows fails to meet lender margin calls. Financial Times.

Digital finance: agreement reached on European crypto-assets regulation (MiCA). The Council of the European Union.

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As the world become increasingly reliant on the connection to the Internet to function, the current infrastructure such as cellular, Wifi, and Bluetooth coverage could be suboptimal, especially when many places today still do not have a reliable mobile network (if at all), let alone the high costs faced by users.

According to a report released by GSMA in February 2022, there are 4.2 billion mobile internet subscribers worldwide by the end of 2021, representing 53% of the world’s population. Around 450 million people globally still live in areas without access to internet services. In addition, data collected by SpendMeNot shows that people in the world, on average, spend $8.53 for 1GB of mobile data. In some countries in Africa, a gigabyte of data can cost a staggering $50!

Source: SpendMeNot.com

As an increasingly commoditized business, telecom operators are facing decreasing revenues from voice services and increasing costs due to the high bandwidth demands, there is a need for them to both reduce costs and find new sources of revenue. As a result, these operators have reduced their efforts at expanding coverage to underserved communities in disconnected areas – in semi-rural regions and urban outposts.

Given operators in this oligopolistic industry have no commercial incentives to invest in disconnected areas, and together with the emergence of blockchain technologies, groups of individuals have taken the matters in their hands and attempt to democratise mobile network service.

Helium is one of the blockchain protocols building a decentralised wireless network. It expands a crowd-sourced, self-funding global LoRaWAN infrastructure, where data transactions are immutable in blockchain ledgers. The LoRa technology in the sub-GHz unlicensed spectrum (beneath the GSHA licensed spectrum of 3G, 4G and 5G) allows for a wide range for very small data transfers. The Helium network applies this technology to a multitude of peer-to-peer ‘hotspots’ that allows users to host wireless devices on their network and earn cryptocurrency (HNT, Helium’s own currency). The more a hotspot is used, the more HNT tokens it generates. In just two years, Helium has expanded to over 850,000 hotspots in around 64,000 cities in 177 countries. And for consumers who use the Helium network, they pay for use in data credits that are valued in HNT.

Despite trying to democratise internet connectivity, Helium does come with its limitations. Right now, most hotspots are in high density cities, making it less useful for people in more remote areas where the coverage gap remains. A Helium miner cost varies depending on its make, region, and provider. The price point of most hotspots rests in the $500-$1,000 range. Therefore, it can be a major investment for an individual consumer, profitability may only come in the long term.

Our thoughts on how telecom operators can leverage blockchain technology

Helium is a proof of concept that blockchain can be applied to mobile network and solve some of the long existing problems faced by consumers. With such evidence, we wonder if, with the right economic incentives, would telecom operators be able to better capitalize the blockchain technology and more effectively resolve the mobile bandwidth coverage gap issue? Therefore, we let our imagination to run wild and propose another idea of how blockchain and mobile network can be combined.

Image credit: Lasani Logistics, Pinterest

Consider a mobile device embedded with micro mining capability to host hotspots, where there are nodes that simultaneously mine tokens for building and securing permissioned network, while providing connectivity to nearby devices. In return for purchasing the device and contributing to the network, users may enjoy free (or much cheaper) mobile network service. With the broad customer base that telecom operators already own today, an extensive network can be established swiftly, as compared to a blockchain protocol which requires building a network from scratch.

From operators’ perspective, in addition to taking advantage of a more robust and secured network, operators may also benefit from substantial costs reduction by eliminating intermediaries. For example, roaming settlement costs can reach 15% of operating profits from providing communication services for a telecom operator, mostly spend on data clearing house and also on roaming software solution. With blockchain technology, every pair of operators with a roaming agreement could be connected peer-to-peer via two nodes on a network, eliminating the need for a clearing house and for licensing end-to-end roaming software. Overall, this creates a win-win situation for both the operators and end users by reducing costs faced by both parties.

Besides providing cheap and secured mobile network using blockchain, there are other use cases for the telecommunications industry. They include:

• Fraud prevention

There are many ways in which a subscriber’s identity can be compromised. Public-private cryptography which is inherent in a blockchain can be used to identify a device and link that device to a subscriber’s identity. As such, a subscriber can be uniquely identified by a public key generated by the device. This public key can be used to authorize the device on the network while keeping the private key information confidential. In this way, the services can only be used by the subscriber who has subscribed to the mobile network services and the ID cannot be easily stolen.

• Identity-as-a-service

A blockchain can be used as a shared ledger that stores identity transactions. A telecom operator can create a virtual identity for its subscribers when they open an account, every time the subscriber wants to visit a partner website, e.g., an e-commerce site, a copy of the ledger entry can be sent to the e-commerce site, the site can use the public key from the virtual identity to obtain the information related to the identity. Not only does Identity-as-a-service creates an additional revenue stream for the telecom companies, but it also provides a secure transfer of data with third parties as well as convenience to customers.

Although the proposed idea remains to be theoretical, it demonstrates the vast amounts of applications that blockchain technology may deliver across the telecommunications industry, enabling operators to offer utilities which were previously non-viable without blockchain technology. Comment below to let us know your thoughts on the application of blockchain in the telecom industry!

 

 

Reference:

The Mobile Economy 2022. GSM Association

Petrov C. (2022). Mobile Data Cost Around the World. SpendMeNot.

Helium Explorer

Helium Network: How much does a Helium Miner Cost? Emrit.

Blockchain @ Telco: How blockchain can impact the telecommunications industry and its relevance to the C-Suite. Deloitte.

 

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Stablecoins: /ˈsteɪblkɔɪn/

As the name implies, stablecoins always aim for one goal: stability. They bridge the gap between fiat currencies and cryptocurrencies by letting crypto users to make transactions easily and quickly without needing to leave the digital asset ecosystem or rely on intermediaries whilst worrying about the value of their coins fluctuating.

There are four primary types of stablecoin, classified by their underlying collateral structure.

1. Fiat-backed

2. Crypto-backed

3. Commodity-backed

4. Algorithmic

#1 Fiat-backed stablecoins

Fiat-backed stablecoins are the most popular type among the four. They are fully backed by fiat currency such as US dollar and short-dated US government obligations which are always redeemable at 1:1. Fiat collateral remains in reserve with a central issuer or financial institution, and it must remain proportional to the number of stablecoin tokens in circulation. The most prominent fiat-backed stablecoins include Tether (USDT), USD Coin (USDC).

#2 Crypto-backed stablecoins

Crypto-backed stablecoins are backed by another cryptocurrency or a basket of cryptocurrencies as collateral. This process occurs on-chain and employs smart contracts instead of relying on a central issuer. When purchasing this kind of stablecoin, you lock your cryptocurrency into a smart contract and obtain tokens of equal representative value in return. To redeem, you can swap the stablecoin back into the same smart contract for the original collateral. An example of this type of stablecoin is DAI. What gives some crypto-back stablecoins a layer of robustness is that they don’t solely depend on one single cryptocurrency, for instance, Maker Protocol (the Dai stablecoin system) accepts any Ethereum-based asset that has been approved by MKR holders as collateral.

#3 Commodity-backed stablecoins

Commodity-backed stablecoins are collateralized using physical assets such as precious metals, oil, and real estate. Tether Gold (XAUT) and Paxos Gold (PAXG) are examples of gold-backed stablecoins. Different from the other three types of stablecoins, commodity-backed stablecoins also provide investors access to these assets which may otherwise be out of reach as well as a fractional ownership.

#4 Algorithmic stablecoins

Algorithmic stablecoins rely on specialized algorithms and smart contracts to manage the supply of tokens in circulation. An algorithmic stablecoin system will increase or reduce the number of tokens in circulation depending on the token price in relation to the price of fiat currency it is pegged to. A case in point would be the TerraUSD (UST).

The Terra protocol consists of two main tokens: UST and LUNA.

UST uses LUNA to maintain its 1:1 peg to the US dollar which could be swapped for UST and vice versa to keep the price of UST where it should be.

To make it easier to understand, imagine that the price of UST is currently above $1, let’s say $1.01. A LUNA holder can then swap 1 USD worth of LUNA for 1 UST. In this case, the market, using an algorithm, will burn 1 USD worth of LUNA and mint 1 UST. The holder can sell 1 UST for $1.01 – profiting $0.01 from the arbitrage mechanism. The logic works the same for the opposite – when 1 UST is trading at $0.99, a UST holder can swap 1 UST for 1 USD of LUNA. The swap will result in the burning of 1 UST and minting of 1 USD of LUNA, holder profit $0.01 from the swap.

Mayday! Mayday!

Terra Protocol and its ecosystem have been all over the headline of news for the past week. TerraUSD (UST) – the protocol’s algorithmic stablecoin has lost its peg twice in three days which ultimately led to a permanent de-pegging. At the time of writing, UST fell as low as $0.15. Meanwhile, LUNA – the protocol’s governance token is almost worthless, trading at almost $0 from a high of US$119.18 last month. This has led to the Terra Validators officially halted the blockchain on 13^th May.

Source: CoinGecko

The event has sent shockwaves throughout the crypto ecosystem, making one to wonder what caused the blowup. The root cause of the fatal crash has not been confirmed, but speculation laid out by the Onchain Wizard suggests that it could be caused by a coordinated attack which has led to the drop of UST deposits on Anchor protocol from $14 billion to $11.8 billion over the weekend. As the Wizard sees it, the problems for Luna began in March when the Luna Foundation Guard (LFG) began purchasing Bitcoin (BTC) for UST’s reserve pool. And at some point, the attacker began building a BTC short position and a $1 billion OTC UST position, knowing that LFG will be creating a new liquidity pool – the 4pool, and requires transferring liquidity between pools. On 8^th May, LFG removed $150 million in liquidity in anticipation of 4pool from Curve. At the same time, an attacker drained $350 million of UST, kick-started the de-pegging. Once LFG began selling its BTC from reserves to save the peg, it put downward pressure on BTC. The attacker also began to offload the remainder of the OTC UST position. With strong UST liquidations, LUNA price starts to collapse because of the Terra’s algorithmic mechanism. The token then went down a “death spiral.”

However, it seems as though fiat-backed stablecoins such as USDT and USDC have managed to kop their head above the water and investor sentiment remains relatively intact. Although USDT briefly dipped to $0.95 last Thursday amid the UST meltdown.

Snowball Effect to DeFi

A chain reaction started a crypto bloodbath, over $350 billion has been wiped off the value of the global crypto market since the UST collapse. And the total value locked (TVL) in decentralized finance (DeFi) protocols has dropped from US$142 billion to US$87 billion, losing over 39% over 7 days. Tokens like Avalanche and Solana that underpin some key DeFi protocols posted over 40 percentage loss at one point.
Source: CoinMarketCap

Source: DefiLlama

The Postmortem

UST was a darling of DeFi. The protocol that seeks to power a stable global payment system with affordable and fast settlement amassed a market cap of $18.7 billion and was the fourth largest stablecoin by market value within 20 months since its launch.

A key implication from this fiasco is the vulnerability of algorithmic stablecoins. This type of stablecoin is uncollateralized in nature. It requires a complex engineering to hold its value steady. In addition, its reliance on the Anchor protocol which offered a high yield (a whopping 19.57% APY!!) to UST depositors adds skepticism to the sustainability of the protocol. For instance, the success of UST relies entirely on the belief that LUNA, a token that is created out of thin air, has value. Once a portion of investors begin to lose faith in Terra, a sell-off could trigger FUD (Fear, Uncertainty, and Doubt) which thereafter cause a loop between further selling of UST, which exacerbates the de-pegging of the stablecoin, and thereafter leads to more FUD and more selling – the tokens go down a ‘death spiral’.

What we observe as the flaw that has led to the meltdown of LUNA and UST is that the stablecoin is still prone to bank runs that happen in the traditional world, except there is no reserve backing the UST which made the problem worse. So when everyone try to withdraw their money at the same time, draining liquidity of a token, the token price plummets.

Nonetheless, the search for fiat alternative will continue, stablecoin is just one of the experiments that take advantage of the blockchain technology. Better iterations and new experiments will be attempted. Indeed, during the same week, Economist Nouriel Roubini, who has been a long-term crypto skeptic known as “Dr. Doom,” revealed over the same week that he is developing a tokenized asset called the United Sovereign Governance Gold Optimized Dollar (USG) that will be backed by real assets including U.S. Treasuries, gold and real estate investment trusts. Whether this attempt to create a more resilient dollar will play out or become just another experiment, only time will tell.

Despite being an unfortunate loss to many, Terra was the biggest algorithmic stablecoin that tried to achieve the decentralized mission of crypto. Afterall, any asset-back stablecoin is fundamentally centralized around a financial institution that opened the bank account. The collapse of Terra reinforced the credibility of the underlying blockchain technology and drew the attention of lawmakers and officials. Their call for stablecoins to be regulated may be a positive news to crypto enthusiasts and investors.

Following the devastating fiasco, US Treasury Secretary Janet Yellen cited the incident during a Senate Banking Committee hearing on the Financial Stability Oversight Council’s (FSOC) annual report, reiterated the importance for robust regulation.

“There was a report this morning in the Wall Street Journal that a stablecoin known as terrausd [UST] experienced a run and had declined in value.” Yellen said.

“I think that simply illustrates that this is a rapidly growing product and there are risks to financial stability and we need a framework that’s appropriate.”

As blockchain and crypto are unprecedented technology and asset, policymakers have been careful trying to understand and develop rules for the sector while leaving the industry guessing. Although the outcome of any new regulation is unclear, the terra meltdown becomes a catalyst to speed things up and would ultimately more stability to the market. The elimination of uncertainty surrounding cryptocurrencies could potentially entice a wider range of investors, particularly cash-rich institutions, providing a boost to innovation.

Reference:

https://www.gemini.com/cryptopedia/what-are-stablecoins-how-do-they-work#section-algorithmic-stablecoins

https://cryptonews.net/news/security/6356357/

https://news.bitcoin.com/us-lawmakers-push-for-urgent-stablecoin-regulation-fed-warns-of-stablecoin-runs-janet-yellen-cites-ust-fiasco/

https://news.bitcoin.com/dr-doom-nouriel-roubini-to-launch-tokenized-dollar-replacement-with-payment-and-esg-features/

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Everyone has a plan ‘till they get punched in the mouth. This frequently cited quote by Mike Tyson gains more relevance today. Politicians may aspire with plans to increase their odds of being elected. Greening economy projects, waging war against inequality, exerting political dominance over other countries, and other populist policies are some of the examples. However, all these means nothing if their leadership fails to bring food on the table.

In our past blog (link), we pointed out how supply chain issues, tight agriculture market, energy crisis, and geopolitical tension crystallised in the great rally of ammonia and fertiliser prices. If we consider the factors at play, this might be the warning shot of an upcoming food crisis.

Skyrocketing food prices have been associated with social unrest and we are at all-time high

It is pretty straight forward why high and volatile food prices could destabilise a society.  Food is both essential and have a significant share of our daily spending. Based on 2018 Euromonitor data, food on average accounted for 28.7% of  consumer spending in 51 countries throughout the globe. For some countries like Bangladesh, Myanmar, Kenya and Ethiopia, this figure can be as high as 53% to 59% .

There are anecdotal evidence in the past whereby food problems led into social unrest. In 1789, the famine led French peasants to storm the Bastille prison and ended up overturning the French empire. In the modern era, the high food prices in 2008 and 2011 sparked numerous civil unrests in the Middle East.

Before the recent boom, commodities were the sucker’s bet of the last decade. At the start of its gracious fall in the 2010s, the substantial commodity investments in the 2000s left the world with abundant stocks of commodities. This time around, the prolonged relaxed financial conditions and minimum investments in this sector drift the world into the opposite setting. There is a lot of liquidity, yet so few goods.

If we consider commodity as a currency of its own, we are seeing where Gresham’s rule of bad money drives out good money in action. The rapid expansion of liquidity without a respective production expansion of commodities led to the appreciation of the latter.

Today, food prices already exceeded the highs of 2011 and are yet to lose their steam.

Countries are taking food protectionism measures to stabilise domestic food prices

We find the severity of the potential food crisis cannot be underestimated. Case in point would be the magnitude of Russia-Ukraine war in escalating this matter.

Both Russia and Ukraine play significant roles in the agriculture or fertiliser market. Russia is the biggest exporter of wheat (18% of global export) and a major exporter of sunflower oil (18% of global export) and fertilizers (20% of global ammonia export). On the other hand, Ukraine is also a major exporter of wheat (15% of global export) and the biggest sunflower oil exporter (37.5% of global export).

The prolonged Russia-Ukraine conflict adversely impacts both near and long-term supply. Near-term supply has been affected because of the logistical hurdles made by the war. The future supply is at risk because Ukraine might miss this spring planting season. The ramifications of sudden drop in food exports at a time of tight stock will be painful and costly to bear by the rest of the world.

For some countries, such as those in the African continent, food affordability and availability will become major issues. From the following graph, we could see how Russia and Ukraine war could jeopardise the procurement of wheat in Africa.

This concern over food insecurity gained the spotlight in the world’s most populated country, China. During the 13^th National Committee of the Chinese People’s Political Consultative Conference on 7 March 2022, China President Xi Jinping underscored the importance of food security and ordered greater self-reliance in its production. Below was his speech as quoted by South China Morning Post:

“Vigilance in food security must not slacken, we must not think that food ceases being an issue after industrialisation, and we cannot count on international supplies to solve the problem… We must plan ahead by adhering to the principles of domestic production and self-reliance while ensuring an appropriate level of imports and technology-backed development… the rice bowls of the Chinese people are filled with Chinese grain”

There is no smoke without fire. The mounting food security risk is even more visible with the spreading food protectionism measures. China, Russia, Ukraine, Algeria, Hungary, Moldova, Turkey, Egypt, Serbia, and Indonesia are growing list of countries that curbs food or fertiliser exports.

A resource-rich country like Indonesia may fare better in facing a food crisis

Indonesia has adequate resiliency in the mounting food insecurity globally. In terms of food production, the country is well-known to have a 59% share in global palm oil production. This vegetable oil is extremely efficient. Palm oil supplies 40% of the world’s vegetable oil demand with only 6% of land used for vegetable oils. These economics made the commodity simply irreplaceable.

Furthermore, the USDA ranked Indonesia as the fourth biggest producer of rice with a 7% global market share. This country is also ranked the twelfth largest producer of corn with 1% global market share.

Given this natural advantage, Indonesia is inherently a net exporter of foods. The skyrocketing price of global food prices would suggest that the country will see its surplus widen. As such, Indonesia should benefit from either relative resiliency in inflation or a widening trade surplus.

According to The Economist’s research on the food security index 2021, Indonesia ranked 37^th of 113 countries globally in terms of the availability of food supply. Ample land for production, low volatility of production, and strong food security policies and agency are reasons why Indonesia fared well on this subject.

Furthermore, Indonesia’s food security improvement between 2012 and 2021 ranks 24^th among world countries. Based on our past on-the-ground observation, infrastructures development and strengthening of food security policies and enforcement are the reasons for the improvement. We discussed more detail about Indonesia infrastructure development in our Q1 2019 report (link).

We think that Indonesia’s resiliency in food security is pretty much reflected in the marginal food cost increase relative to the global average from 2010-to 2021.

In the world of commodities shortage and abundant liquidity, those who own the former will stand to benefit. Besides food, Indonesia produces lots of commodities and has been regarded as resource-rich land for decades. How will the booming commodity market affect Indonesia? How it be different this time? Stay tuned to our blog!

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While China’s push in technology is hardly news, its rising tensions with the West have sped up their need to become less dependent on foreign technology. In its 14^th Five-Year Plan on Digital Economy, China’s leaders emphasise, once again, their ambitions for the country to seize the leading position in the global technology race. The plan highlights China’s intention to boosts its global competitiveness in advanced technologies such as semiconductors and artificial intelligence. And blockchain was listed as a “key digital technology” alongside AI and cloud computing, which we coined as the “ABC”.

China’s Ambition in Blockchain Begins with Digital Currency

Over the past decades, China’s technological advances have mixed performance. While leading in 5G deployment, it lags behind western countries in technologies with more strategic positions, such as artificial intelligence and semiconductors. The catch up race has been painful and costly.  However, China may have indeed established a strong head start when it comes to blockchain.

While the initial concept of blockchain technology is underpinned by its decentralised nature, China’s version is different. It is a centralised operation which guarantees complete state control over the development and application of the technology. China’s drive for blockchain technology goes beyond economic ambitions. The technology essentially allows for effective government surveillance capabilities at both micro and macro levels.

The Chinese government has been investing in the financial application of the blockchain technology. The development of the digital yuan is among the core strategic priorities. The large scale domestic rollout of the digital yuan would align with Beijing’s push for financial security. The use of its CBDC not only increases its ability to monitor financial activity and tackle illicit activities, it provides Beijing an independent source of valuable customer data, meaning they will no longer need to obtain customer information from payment companies to monitor citizens’ transaction.

Image credit: TechNode/Jiayi Shi

But the Ambition Goes Far Beyond Digital Currency

The digital yuan is positioned to serve as the infrastructure for the country’s international economic agenda which is underpinned by the expansion of a China-centric digital ecosystem that encompasses technologies such as 5G, IoT, AI and big data. And since blockchain run on the internet, it is imaginable that China will try to control the underlying  communication protocol, domestic national cloud infrastructure and AI at the same time. However, the government is having a difficult time censoring and controlling the exchange of information between computers due to the distributed nature underpinning TCP/IP (transmission control protocol/internet protocol), the communication protocol that governs how data moves around the Internet.

Noting this stumbling block, Huawei proposed the “New IP” to replace TCP/IP. The New IP proposal emerged at a 2019 meeting of the International Telecommunication Union, a UN agency responsible for all matters related to information and communication technologies. The New IP is designed to offer more efficient addressing and network management than the existing TCP/IP standard, but it is likely to come with hooks that allow authoritarian nations to censor and surveil their residents, including features such as a “shut up command”. The new model is said to replace current centralised parts of the internet, such as Domain Name system (DNS), with Distributed Ledger Technology (DLT) solutions. However, as aforementioned, the blockchain technology proposed by China is likely to differ from commonly known definition of the technology, decentralisation is out of the question in China, but advanced adoptions of the ABC can be expected in areas ranging from energy conservation to urban management and law enforcement.

Cities of the Future

The government sees blockchain as a key pillar of its smart city infrastructure initiative that is currently being built across China. A smart city is an ideological term that refers to the development of cities that utilises advanced digital technologies including the likes of blockchain and IoT, as well as robotics and AI to optimise urban management and services including road network management, public health, energy generation, communication and food safety.  Local tech giants including Alibaba and Tencent are also heavily involved in supporting the development.

At present, there are 11 regions in China using blockchain technology to build a smart city system. Among them, the Xiongan New Area (possible future capital) was the first to be transformed into an intelligent city prototype. In 2018, Ant Financial, serving as the core blockchain technology provider, launched the blockchain rental application platform in Xiongan. This means that individuals will have their own credit score based on their rental related record. Blockchain also became an integral part of Shanghai’s smart city program, where it helps to collect and store vast quantities of data to assess optimisation levels for garbage classification management. The blend of blockchain with other technologies within the smart city ecosystem is likely to expand as China’s ambitious aspirations to take the lead on blockchain meets its equally ambitious aspirations to accelerate itssmart city development.

 

Xiongan Railway Station of the Beijing-Xiongan intercity railway in Xiongan New Area, north China’s Hebei Province.

Image credit: Xinhua/Xing Guangli

Invest in the ABC Before They Change the World

The above are only a few examples among the many use cases of blockchain in China. The Chinese government’s approach towards blockchain and its integration with other cutting-edge technologies provides it a first-mover advantage over other countries that are yet to make a move in this field.

Having said that, it may be many years till the country reaches notable success in the advance technology sphere given it is still far from technological self-sufficiency and remains reliant on foreign technologies such as chips design and manufacturing. China will likely face stiffer challenges in acquiring foreign technologies such as on semiconductors due to growing western consensus to curb its access. Its roadmap to becoming a global leader in critical technologies of the future will require the integration of advanced technologies which will be crucial to the development of other advanced industrial sectors. As such, the ABC strategy may present profitable opportunities in years to come as countries increasingly dedicate resources in technology sector as part of their national strategic plans.

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