For many, ESG and digital asset investing are miles apart, with cryptocurrencies in particular being too dirty, too anonymous and too out of reach to be a force for good. For others, the digital assets space is growing closer to the ESG investing space, portending an eventual convergence of the two asset management trends at some point in the future.
For others, like Michael Kisselgof, co-founder of Popcorn, a crypto and decentralized finance platform that combines yield-generating investing opportunities with the ability to create social good, the future is already here—if we’re willing to participate.
“We’ve created a permission-less opportunity for anyone to generate yield with crypto assets,” said Kisselgof. “Simultaneously, what we’ve done is to create a routing system to fund impact organizations and non-profits.”
What Is Popcorn?
Popcorn, simply put, is a crypto yield aggregator that extracts an auditable fee and sends that to charitable organizations. Investors are offered a token to participate in the centralized governance of Popcorn, including the ability to vote on beneficiaries and set parameters around investments.
Investors participate in Popcorn with their cryptocurrency via smart contracts. The first Popcorn product, Butter, is an optimized stablecoin strategy which uses interest-bearing tokens. A leveraged version of the product, Hot Butter, will also be available to investors. Kisselgof says the strategies are capable of offering 15% in annual yield to investors.
That’s some branding. Who doesn’t love hot, buttered popcorn?
More generally, Popcorn strategies stake, claim, re-supply, leverage and swap cryptocurrencies, all common yield-generating tactics, using automation and other technology to optimize the yield and to keep the amount of gas the strategies have to pay, or transaction fees, at a minimum.
“It’s a new asset class altogether,” he said. “By virtue of using Popcorn, you are creating impact because a small fee is later contributed to award contracts.”
Most financial advisors understand cryptocurrencies as a speculative asset or a store of value, said Kisselgof, but few realize that digital assets can also be put to work passively through automated yield-generating strategies. He describes stablecoins as resilient in market downturns, thus, the Butter strategies might be an alternative that could be carved out of an investor’s fixed income allocation.
Doing Good By Doing Well
Up to half of the fees generated by the Popcorn Network, or a minimum of 20%, are placed into a user-curated list of high-impact organizations—Popcorn has an underlying digital autonomous organization (DAO) that makes decisions on how to distribute the network’s impact earnings. Investors in Popcorn strategies earn Pop tokens, allowing them to participate in the governance of the DAO.
Token holders can nominate and support beneficiaries via a multi-step nomination, proposal and funding process. Popcorn’s security mechanisms help protect against cyberattacks, bribery and collusion.
Kisselgof explained that the DAO pursues three distinct types of initiatives in its giving: environmental, open-source and educational.
Popcorn itself is open source, said Kisselgof, and is willing to collaborate with any project that can contribute to the public good.
It has partnered with Vanderbilt University’s Blockchain Club to create a yield-farming scholarship fund, allocating 100,000 pop tokens to the fund, allowing the university to participate as a delegate within the Popcorn DAO.
Popcorn has also pursued its environmental initiatives via a recent partnership with Patch. The partnership incorporates emissions data into Popcorn’s investments allowing it to calculate the carbon footprint of any smart contract executed across the platform and automatically account for those emissions by contributing to carbon offset projects like reforestation, carbon removal and other nature-based carbon sequestration efforts, as well as the implementation of new neutral and negative-emission technology.
In addition, Popcorn considers initiatives that reduce inequality or support a free press.
Eyes On Fixed Income
“It’s very clear that there’s this gigantic demographic pouring into crypto right now from traditional finance, and what we’re going after is the ESG demographic,” said Kisselgof. “Then, if you look at the fixed income retail market, that’s $9 trillion in market cap in the U.S. alone—if you just take a fraction of that market, you can see how Popcorn has a place to live in this world. Even a small fraction justifies what we’re doing.”
But Popcorn’s approach will be to get limited partnerships from institutional investors on board while simultaneously targeting retail investors with a simple, easy-to-use approach.
“We’ve gone down to our aesthetic,” said Kisselgof. “We wanted to create something where if you came to Popcorn you feel comfortable about using our products. We wanted to make sure that all of how we approach going to market, marketing and PR resonates with everything else we do.”
In the future, Popcorn will expand beyond its Butter stablecoin strategies into other digital asset classes, said Kisselgof, but it will continue to apply the decentralized, social impact-focused structures.
So Popcorn investors can enjoy a healthy yield in a carbon-neutral or carbon-negative product, said Kisselgof. This allows environmentally and sustainability driven investors to participate in the cryptocurrency space now without compromising their values, obviating the need to wait for cleaner blockchain protocols to become mainstream.
While there are some mission-driven crypto and blockchain projects designed to address climate change or social impacts, there aren’t any designed in a way that combines financial participation incentives with the ability to create material good, said Kisselgof.
“I feel kind of shocked that nobody else seems tobe doing what we’re doing,” he said. “DeFi is a byproduct of people in the crypto world who are kind of like anarchists at heart, which is actually great, it allowed us to create a new mechanism and infrastructure that allows us to not only generate income and returns for ourselves but also coordinate and collaborate in decent fashion. The problem is that a lot of DeFi has not been purposefully designed for people outside of crypto to come in and understand what’s going on—but the levee is about to break, big time.
“DeFi will be this new infrastructure for finance going forward, regardless of anything the SEC wants to do or China banning mining and crypto transactions. Just look at the market capitalization of all crypto and watch the trend line going back to 2012. We’ve already rewired monetary and fiscal policy using cryptography.”