Scott Smiley, co-founder of Lydia Labs and ICON’s head of strategy, knows how to get through a bear market.

Of course, I want ICX and ICON Network to be more valuable,” he says. “So what do we do to alleviate people’s concerns? I just keep building. I keep building Balanced and working on BTP because it’s an exciting technology that’s unique.”

The former Deutsche Bank analyst has been one of ICON’s biggest movers since he joined the network’s founding team in 2018. His incubator, Lydia Labs, is deeply involved in the development of some of ICON’s most important components and services, including its potentially revolutionary interoperability solution, the Blockchain Transmission Protocol (BTP). 

Scott himself has made enormous contributions to the development and roll out of Balanced, one of ICON’s premier DeFi platforms.

‘Can’t believe I’m missing out on this’

Scott can thank his former roommate from his Deutsche Bank days for his life in crypto. In those days, he knew next to nothing about digital assets, and had only vaguely heard of Bitcoin.

Then one day, his roommate downloaded the cryptocurrency exchange Coinbase.

He showed me Coinbase, showed me the wallets and the price charts, and I got super into it,” he recalls. “I was like, man, I can’t believe I’m missing out on all of this. I need to learn about it.”

The more Scott learned about blockchain and smart contracts, the more he came to understand the technology’s transformative potential.

Once I really dug into Ethereum, and understood what a smart contract is, I started to see the implications on many different industries and how smart contracts could be used,” he said. “I got really excited about the industry and the emerging technology, and took a leap into the space.”

A cross-chain DeFi platform?

Scott has long been involved with DeFi platform Balanced, which provides a “decentralized, overcollateralized stablecoin,” the Balanced Dollar (bnUSD), as well as a decentralized exchange to trade said stablecoin. Users can mint or borrow bnUSD using volatile collateral. 

Scott says Balanced wants to grow the collateral types once ICON has connections to more blockchains through BTP.

He says, “The long-term goal for Balanced is to get high distribution of bnUSD across multiple ecosystems with lots of different use cases, and making sure it has a highly diversified backing with many different types of collateral.”

For example, ICON Bridge — the lite version of BTP — will be integrated with BNB Smart Chain when it launches, so Balanced would like to offer BNB tokens as a collateral type, or perhaps offer trading of Binance USD against bnUSD.

Scott says, “We’re already thinking about how to use the more advanced version of BTP to provide a seamless user experience for users of other blockchains other than ICON.”

Keeping stablecoins stable

In particular, Balanced has been remarkably successful avoiding the crises that have befallen some of the crypto space’s major stablecoins.

Scott attributes this to a recently created “stability fund” that was designed to keep the bnUSD pegged to the greenback.

He says, “It’s the primary source of stability for the protocol. Hence its name.”

He is particularly impressed by how quickly the fund went from whiteboard to full implementation.

The stability fund — which was conceived, discussed, implemented and deployed in less than three days, maybe 48 hours — really stabilized the platform,” he says. “From a high level, the stability fund creates clear arbitrage opportunities to keep bnUSD stable, rather than relying on faith that bnUSD will be worth a dollar, or relying on the rebalancing mechanism that forces borrowers to make certain trades.”

Besides the stability fund, Balanced has made some other recent improvements, including an upgrade to its continuous rewards service that not only now provides real-time loan and liquidity rewards, but also provides them in a cleaner way with lower transaction fees and a lot less maintenance.

Scott also says the recent migration of Balanced’s smart contracts to Java opens the door to even more upgrades, including the implementation of so-called “boosted” Balanced tokens that reward users who lock up their tokens for longer periods of time with a bigger share of governance, and multiple collateral types.

Quality over quantity

Describing ICON’s DeFi ecosystem, Scott says all the pieces are in place.

I think all the services are there,” he says. “Maybe not complex services yet because they are not really necessary. But access to leverage? Balanced and OMM both offer that. Access to lending your assets? OMM offers that. We have a stable coin and the decentralized exchange and money market. All the LEGO pieces are in place.”

Scott says we’re now seeing the development of more complex services, such as Karma Finance, that are built upon the existing ecosystem.

He praises ICON’s DeFi ecosystem for focusing on the user experience.

I think ICON’s DeFi ecosystem is quality over quantity,” he says. “Teams that are building these products are focused on making their product great rather than forking existing products to make a quick cash grab.”

ICON’s Trojan Horse

Scott is the co-founder of Lydia Labs, the accelerator that evolved from ICX Station, the incubator that contributed to two DeFi protocols — Balanced and OMM — and ICON’s bigtime NFT marketplace Craft Network.

While ICX Station was very focused on ICON — “ICX Station said it in its name,” says Scott — Lydia Labs embodies the multichain ethos.

Scott believes the cross-network emphasis will bring users and use cases to ICON.

Lydia Labs encompasses that effort to go cross-network, to build awareness,” he says. “And in so doing, people can see that Lydia Labs has been successful in the ICON ecosystem. People who have never heard of ICON can be like, ‘Oh, Lydia Labs. They’ve done great in our ecosystem, let’s see what else they are working on. Oh, they have this project called Bridge wallet, it’s on the ICON ecosystem. Let’s learn more about that.'” 

I think of it almost like a Trojan Horse,” he adds. “We can expand to other networks, and find use cases for BTP along the way, and expand Balanced there if it makes sense.”

BTP: ICON’s big value add

Scott says ICON offers a lot of advantages for developers. And with BTP, those advantages will grow even greater.

For starters, the upgradability of contracts makes technical architecture a lot easier to handle. Developers can simply upgrade smart contracts rather than always having to deploy new ones.

Scott says, “You can fix early issues, add new features, and then decentralize more and more as the product matures and solidifies.”

Developers can also write their smart contracts in Java, a rarity in the blockchain space.

It’s a popular language among enterprises. People know Java. They learn it in school, as opposed to Solidity (the language of Ethereum’s smart contracts),” said Scott. “So it’s an easier onboarding experience if people really want to start diving into smart contract development.”

He adds, “I can tell you one thing. It’s going to be a lot easier finding an expert Java developer than an expert Solidity developer.”

Scott especially believes that the interoperability solution BTP is ICON’s chief value add.

He says, “I would like to see BTP get deployed on multiple networks, and then use BTP to expand Balanced to several other networks, and then use that as a proof of concept to show what people can do with BTP technology.”

While Scott won’t comment specifically on when it will be released, advising we reference ICON’s regular updates instead, he did say many of the pieces are already in place.

A lot of the components of BTP have been built,” he says. “The proof of concept for the arbitrary call service is done. I’m already looking into that from the Balanced side.”

While the developers have implemented several other components, they are still running tests. “Testing is a huge part of the development life cycle.”

For Scott, one of BTP’s chief selling points is its security. Given the recent spate of high-profile hacks on the bridging solutions of some other blockchain networks, it’s hard to disagree.

There are a lot of bridge solutions out there,” he says. “They can all offer similar products, but it’s about how they achieve these products. Do they do it with just a handful of people and a multi signature wallet? Do they take security seriously? What security assumptions are they making?

With the completely trustless solution BTP, it comes down to light clients — essentially, mini-versions of the blockchains themselves. He says, “The light clients are as secure as the chain itself.”

And if you’re a developer, there are definitely advantages to building directly on this nexus of interoperability.

Scott says, “Directly building on a hub like this makes for the cheapest and fastest cross-chain communication because you’re building directly on the chain that is facilitating the cross-chain messages.”