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If you think you know about blockchain and its benefits, we suggest you don’t read this interview with Jason Delabays, Ecosystem Lead at Zama. That’s because he has a nasty habit of making you realise that you don’t really understand blockchain at all.
Take one of its supposed benefits, transparency. “People think transparency is a feature of blockchain, but in 80% of cases, it’s actually a drawback,” he told us. “In reality, both regular citizens and corporations need confidentiality.”
So with that assumption gone, what’s so good about blockchain? “Cost reduction,” Jason said. “You can send $100 billion in a single transaction for just a few cents, which is unheard of in traditional finance.” Jason firmly believes blockchain will transform how organisations lend money – and that the staid world of finance is in dire need of change.
But there is plenty of work to be done, he adds, which is where Zama enters the frame. He describes Zama as a “blockchain and decentralised finance (DeFi) specialist with a focus on Fully Homomorphic Encryption (FHE)”.
His job as Ecosystem Lead is to develop use cases for FHE to solve the privacy challenges he mentions above, whether for corporates or state nations. And he has plenty of experience, have launched and grown a blockchain-focused business of his own.
Which leads naturally to our first question of how he got into blockchain in the first place…
Like everyone, I didn’t understand anything about blockchain technology when I first discovered it. Back in 2018, British comic John Oliver famously said of cryptocurrency, it’s “everything you don’t understand about money combined with everything you don’t understand about computers” – which pretty much summed up my first impression!
But once I started exploring it, it felt like stepping into a whole new world where anything was possible. It was this open, permissionless space where people were building crazy, innovative things. I got into it during DeFi Summer in 2020, and it was like watching finance turn into Lego – everything was modular, constantly evolving and open to experimentation.
I’d start by explaining just how bad the current state of IT in finance is – layers and layers of outdated, clunky systems that don’t talk to each other. It’s really, really bad.
Then, I’d highlight one of blockchain’s biggest advantages: cost reduction. You can send $100 billion in a single transaction for just a few cents, which is unheard of in traditional finance.
I’d also clear up some of the biggest misconceptions. People think transparency is a feature of blockchain, but in 80% of cases, it’s actually a drawback and is a side effect of decentralisation and consensus. In reality, both regular citizens and corporations need confidentiality, and that’s something blockchain still needs to address.
There are so many areas where blockchain is set to shake things up in the coming years: financial services, lending and borrowing of any kind of asset, collateralisation, bond issuance and trading, securities trading and remittances, just to name a few. But right now, one of the most exciting areas for me is lending and borrowing.
Morpho – a permissionless, non-custodial lending protocol on Ethereum and Base – is an amazing protocol in this space. There are 50,000 banks in the world, each with its own software for something as fundamental as lending and borrowing, and most of these systems are completely siloed. With Morpho, everyone uses a shared protocol, which is a huge step forwards. It’s not just another piece of software, it’s a common good with common rules that everyone can rely on. Just like the internet revolutionised information transfer, this kind of protocol has the potential to do the same for basic financial functions.
Others I particularly admire in the space include the Ethereum Foundation, which stands out for its integrity and long-term vision. They’re constantly pushing the boundaries of what’s possible with blockchain.
And then there’s Tether. Their success with USDT [Tether tokens] is incredible; it’s one of the most impressive companies on earth, not to mention one of the most profitable.
On the flipside, as blockchain continues to evolve alongside emerging technologies like AI and IoT, I’ve seen a lot of bad projects as well. There’s plenty of hype, but not everything being built is actually useful or sustainable.
One of the biggest challenges is regulation. It’s either too restrictive, like MiCA in Europe, or completely unclear, like in the US. That uncertainty makes banks afraid to get involved.
Security is another major concern. When developers and companies deploy blockchain solutions, they have to be extremely careful with the security to avoid hackers seizing money.
One of the main characteristics of blockchain is that everything is public; however, this transparency can jeopardise the privacy of key users’ information. The key is then to find the right balance between transparency and confidentiality. There are a number of technologies already widely used to improve privacy onchain – for example MPC and ZK – however they all present some limitations.
Fully Homomorphic Encryption (FHE), however, is a cryptographic technique that enables you to process data blindly without having to decrypt: this offers a clear advantage compared to others options, bringing together the best of both worlds.
That really depends on what we mean by data security.
If we’re talking about preventing hacks, blockchains are incredibly secure when smart contracts are written properly. However, a lot of smart contracts are poorly designed and do get hacked, but that’s not a failure of the blockchain itself. It’s a really important distinction to make.
On the other hand, if we’re talking about data privacy, that’s a different story. Transparent data is not secure, anyone can see your bank account and past transactions when you interact with them, which isn’t ideal from a privacy standpoint. Privacy on the blockchain infrastructure can already be improved with technologies such as FHE, but what it really needs to add extra layers of confidentiality are decentralised apps that operate seamlessly in the blockchain ecosystem. New and emerging protocols such as fhEVM have been designed to enable developers to easily create privacy-preserving dApps.
One of the most impactful ways blockchain can be used for social good is by putting the balance sheets of systemic financial institutions and governments on a blockchain. This would provide a level of transparency that’s never been seen before, giving everyone the ability to see how funds are being managed. It’s the only net positive use of transparency in that sense.
