Blockchain Pioneers: The Remarkable Journey of Two Indian Brothers Conquering the Global Stage

LIf college dropouts can blossom into digital stars, then ambitious teens with their daring can rewrite the rules of entrepreneurship. The duo Sowmay Jain and Samyak Jain have recently achieved great accolades from their blockchain startup – ‘
Instadapp
.’ Sowmay Jain, a year after graduating from high school, dreamed of becoming a chartered accountant but opted out, as did his brother Samyak Jain, a first-year computer science student.
They met at a hackathon in Bengaluru in August 2018 with a shared enthusiasm for finance and firm confidence in the power of the internet, both as an instructor and as a medium to exploit someday.India is a major Ethereum event for developers who want to create a product in a few days.
Ethereum
is a blockchain-based software platform with its token, ether, similar to bitcoin.
Ethereum is also a platform for “smart contracts,” or software encapsulating business rules.For the Jain brothers, the hackathon proved to be a watershed occasion. They came up with the name Instadapp – a blockchain startup (‘insta,’ a popular prefix in cyberspace that appealed to them, and dapp, which stands for ‘decentralized’ app).
They were discussing Decentralised finance (or DeFi for short). This blockchain-based finance network allows people to lend and borrow money from others and earn interest in savings accounts. “It all started as a pastime for us, but we pursued it, and we came out on top in the hackathon,” adds Sowmay Jain.“We kept on expanding Instadapp, adding new features and addressing additional difficulties in decentralized financing,” he says, adding that there was “no going back” after that. By September 2019, the Jain brothers had surprised many in their sector by raising $2.4 million in a funding round headed by Pantera Capital (in USD, Sowmay Jain insists). “We have just finished another round of investment where we are raising a significantly greater sum, specifics of which I still cannot share,” Jain says to Financial Express Online.According to him, the first round of funds was used to hire talent, and the most recent round of funding will be used to “expand the in-house engineering team as well as provide grants to developers building on top of our platform.”
The Business Model“Instadapp’s revenue strategy will be to deduct fees on financial volumes and lending/borrowing going through the platform,” he explains their business model and how they make money. However, he quickly clarifies: “Right now, everything is free for users.” We intend to establish our tokens / DAO in the following weeks and determine the fees.” In layman’s terms, a Decentralised Autonomous Organisation (DAO) is a software-based organization that avoids a middleman (human intervention) need by encapsulating transaction rules in software and managed by computer code and programs.Size and GrowthWhen you ask Jain about their present size and operations, he refers you to DeFi Pulse. This website records and distributes information about who is leading in the decentralized financial space: “According to DeFi Pulse, Instadapp is the 7th largest entity in the DeFi space globally, with $4.5 billion in assets blocked in smart contracts on the blockchain,” he says, adding that the app allows people to lend, borrow, trade cryptocurrencies, and earn interest in savings-like accounts with high returns but also increased risks.Regulatory Defiance But there are other roadblocks to overcome. In India, the regulatory situation is largely unclear. “Right now, according to the current rules, it is difficult to convert rupees into cryptocurrency,” Jain explains. Banks, he claims, are blocking cryptocurrency accounts, so “if the government can make it easier to transfer rupees to crypto and crypto to rupees, that will be a huge relief.”But, with the new cryptocurrency laws, how would a software like Instadapp facilitate seamless fiat currency exchange operations — changing rupees to crypto and vice versa?“We provide foundational Defi integration,” Jain explains. Other services can connect without infrastructure and build their system on top.
Exchanges, for example, can provide a fiat-on-ramp (a platform that allows a person to convert fiat money, such as dollars or other government-issued paper money) and allow their users to use Instadapp for Defi operations.”But, since no regulation is complete without a piece of the pie for the government, the issue of revenue becomes critical. So, how do the two brothers envisage decentralized crypto assets being taxed? Is it when you withdraw money or when you convert it to fiat? Sowmay Jain responds, “Crypto should be taxed as an investment, just like all other investment options” (capital gain tax). It could happen when profits are being booked (that is, at the time of selling). The rest is up to each individual to declare their crypto holdings.”Remote WorkingWhat appears to be working for the two brothers at present is that their business is well-suited to remote working, which is critical in these times of the coronavirus pandemic.
While they started in Hyderabad and now have 25 individuals – all of whom work remotely – they incorporated Instadapp in Delaware, USA. Most have been employed through Twitter-based on “their work, talent, and not degrees,” according to Sowmay Jain, 23. “These are generally high network clientele and include funds, high net worth individuals, and even institutes,” he says when asked about the profile of Instadapp users.