Alexander Tkachenko, Founder & CEO at VNX tells us about tokenization of traditional assets.
Tell us about you, your career, and how you founded VNX.
Alexander Tkachenko: I started my career as a journalist, then in 1997, I moved to Luxembourg while working in the marketing department for a Japanese electronics company. In 2014 I set up an early-stage VC fund, 2be.lu, which has since invested in 25 companies focused on the sharing economy, artificial intelligence, and blockchain technologies.
I was always passionate about technologies that can transform business models and improve the quality of people’s life, such as blockchain and artificial intelligence. I got into blockchain/crypto in 2017 while researching new verticals for 2be.lu. At the same time, I saw a lot of issues in traditional industries that can be solved with blockchain technology. For example, the VC industry’s issue of long investment periods and the illiquid nature of VC makes it difficult for smaller funds to attract smaller investors. At that time, one of our portfolio companies developed a blockchain platform for the secondary sale of electronic tickets, which gave me the idea to see if that could be adopted for VCs. That’s how I first got the idea of a platform for the tokenization of traditional assets. So in 2018, I founded VNX, which started as a platform for the tokenization of VC fund portfolios, and in 2022 expanded its product line with tokenized precious metals.
How does VNX innovate?
Alexander Tkachenko: VNX brings innovations to the world of traditional assets by offering new convenient ways for investments. With the help of the blockchain, we are providing an opportunity to invest in traditional assets to anyone. Our investment platform simplifies the investment process, offering our clients lower investment minimums, 24/7 access, quick and secure transactions, and full transparency. VNX offers unique products that revolutionize and democratize traditional investments through tokenization.
In 2020, VNX successfully completed Europe’s first blockchain-based venture capital deal and helped raise €1.1 million for South Korean fintech company, Streami. In 2022 VNX also became the first European regulated platform for investment into tokenized precious metals and launched its new product, a tokenized gold – VNX Gold. This innovative product combines the reliability of gold with the flexibility of a crypto asset. And we see a lot of demand for hedge assets at the moment.
How did the coronavirus pandemic affect your business?
Alexander Tkachenko: The challenging times brought by the pandemic were followed by inflation, market volatility, monetary changes, and a slowdown in the development of financial institutions. 2021 has seen unprecedented inflation caused by massive liquidity injections and quantitative easing programs. Inflation in the EU reached 5.3% in 2021, the highest since the euro was introduced. That has shifted investors` focus from a high yield investment strategy to capital preservation and hedge. This year also, the geopolitical situation added more uncertainty.
We tried to see opportunities during difficult times. The VNX team offered a new product of tokenized precious metals in response to the market conditions. Throughout history, people all over the globe have relied on the value of gold. For more than 5,000 years, the precious metal has been the backbone of the finance and has outlived scores of currencies. If we look at the major modern fiat currencies, they’ve lost from 78% (Swiss franc, Japanese yen) to 98% (Indian rupee, Indonesian rupiah) of their value compared to gold (1979-2021).
But investments in gold have been complicated by manual and outdated purchase and sale processes, expensive storage, and difficult transportation. VNX solves all these problems with tokenization, opening up a modern and smart way of precious metals investments. So we became even stronger in terms of quality and diversified product offering.
What are the current trends in the DeFi industry, and how fast is it changing?
Alexander Tkachenko: DeFi is evolving rapidly. In order to understand the pace of development of this sector, it is enough to look at its market capitalization. Over the past year, since April 2021, the capitalization has grown from $75B to $210B.
In my opinion, the main focus for this promising and fast-growing market will and must be in:
– Ensuring “Low-hanging fruit” (simple services) for DeFi are implemented/built to herald in CeDeFi. Soon most of the ‘low-hanging fruit’ projects in DeFi will already be implemented. Accordingly, the time for the DeFi market to evolve further towards the implementation of more complex DeFi models with user-friendly experience is right in front of us. One of these will be centralized, decentralized finance (CeDeFi). This natural expansion of the billion-dollar DeFi model to the trillion-dollar CeDeFi models will see dApps become easier and more user-friendly so that users in 5 years will not know they are using blockchain.
– The entrance of traditional financial institutions and products into the DeFi space. Traditional financial institutions and products’ entrance into the space is crucial given the reality of Defi as a global market where the product is available to anyone with an Internet connection. A decentralized application does not have many costs that traditional finance has, such as staff, offices, etc.
– The Rise of DAOs. In the near future, we will see the entrance of the DAOs (Decentralized Autonomous Organizations) into the VC market. Additionally, over the next 3 years, these DAOs will become among the 5 most active and largest venture capitalists.
– Importance of governance tokens. Most of the growing DeFi platforms have their own governance tokens, providing holders with voting rights. This trend has become very popular in 2022 and, in my opinion, will continue to gain importance.
– Clarity in DeFi Regulation. Lack of clarity regarding regulation is one of the biggest setbacks for DeFi. Many countries are already developing regulatory measures, such as the EU’s Regulation of Markets in Crypto Assets (MiCA). In my opinion, regulation will play a crucial role in shaping future DeFi trends.
Who is the target audience of VNX? Do you have any interesting partnerships?
Alexander Tkachenko: We created our solution for experienced and novice investors who would like to take the best of crypto solutions on one platform: from preserving the capital to earning more yields on each euro. A lot of regular investors do not know how to take advantage of crypto and DeFi due to a number of reasons such as lack of knowledge, difficulty from the technological perspective, lack of confidence and trust, or lack of solutions for institutional investors. Most people in the 1990s did not know how the Internet worked but eventually adapted to successfully sending letters, reading news, meeting people, shopping, etc. The same with crypto, we want to make crypto investing easy and user-friendly like traditional finance apps but with all the benefits of crypto and DeFi under the hood.
As for the interesting partnership, I think it is worth mentioning that VNX partnered with the University of Luxembourg’s Interdisciplinary Centre for Security, Reliability, and Trust (SnT) to improve the platform’s development and maintain a high level of security. We have successfully worked with them for several years now. We also partnered with Sumsub, a scalable solution for KYC/AML regulatory compliance, to stay in line with jurisdictional demands and ensure platform compliance. At the moment, we are considering more partnerships, and I hope soon you’ll learn more about them.
Tell us more about your platform/technology.
Alexander Tkachenko: Today, the platform allows people to buy tokenized gold – VNX Gold (VNXAU) – a token based on Ethereum, representing an ownership stake in physical gold bullion certified by the London Bullion Market Association (LBMA). Each VNX Gold token represents ownership of one gram of physical gold and offers investors all the advantages of its underlying commodity merged with the flexibility of a crypto asset.
VNX platform allows users to purchase tokenized gold in the form of VNX Gold tokens using Euros, Ether, or Bitcoin from anywhere around the world in just a few clicks. Users can transfer their VNX Gold tokens to any Ethereum wallet while the physical gold is stored in a vault in Liechtenstein with full insurance and zero storage fees. Holders can also collect their physical gold or receive a minimum of one kilogram of gold via global delivery. We have plans to add more metals such as silver or palladium.
What really makes us different is that trust and assurance are the core of our business. VNX Commodities complies with the regulations and leading standards of investor protection. We are the first registered platform for tokenized precious metals under TVTG by the Liechtenstein Financial Market Authority (FMA).
How do you see the future of VNX? What are the next steps for the company?
Alexander Tkachenko: In the future, I see VNX as an all-in-one platform that provides easy, secure, and direct access to digital assets for companies and individuals. The functionality of the platform will expand, and even more assets and features will be added, providing investors with easy and convenient access to a wide range of investment opportunities. One of the directions we are looking at is DeFi which is opening enormous opportunities for investors but still has a lot of drawbacks and hurdles for mass adoption. So we will tackle them and plan to bring the next million of users to DeFi.
VNX is a digital asset investment platform for the tokenization of traditional assets that allows investors to access a new asset class. VNX offers two solutions: VNX STO and VNX Commodities.
VNX STO (https://vnx.lu) is a platform for asset tokenization and deal syndication based in Luxembourg. The platform enables its customers to tokenize various assets, digitalize the fundraising process and effectively syndicate deals. VNX successfully completed the first VC deal in Europe utilizing blockchain technology.
Launched in Liechtenstein in 2022, VNX Commodities (https://vnx.li) is an FMA registered platform for investment in tokenized precious metals, which facilitates the purchase, sale, and storage of precious metals. The VNX platform accepts fiat and crypto payments, enabling its users to easily and efficiently manage physical commodities transactions with its digital tokens at low fees and with guaranteed security of assets. VNX Gold tokens represent ownership of physical gold in the specific numbered bullion, which is stored in a high-security vault in Europe. Each VNX Gold token represents one gram of pure LBMA-certified physical gold.
About Alexander Tkachenko
Alexander Tkachenko is the Founder and CEO of VNX and Managing Partner at 2be.lu, Luxembourg VC fund. Alexander is a serial entrepreneur, business angel, and member of the E100 – LBS business angel network. He is also co-Chair of the VC club at the Luxembourg Private Equity and Venture Capital Association (LPEA) and an Executive Council member at the Digital Banking and Fintech Cluster in Luxembourg Banking Association (ABBL).
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