Last week, I made the mistake of being the only DeFi citizen who actually went to the Bitcoin 2021 event in Miami.
While I managed to catch up with a handful of builders and big minds at the convention center, my time would be better spent tracking down degens at various satellite events, yacht parties and nightclub meetups – the “shadow conference” to take DeFi. While boomercoin maximalists have spoken out on the same points they have been parroting for the better part of a decade.
However, the little time I got to spend with the people at DeFi was very rewarding. I came away from conversations with representatives from Sushi Swap, Ear Finance, Balancer, Polygon, the Digital Dollar Project, and FTX, along with some useful kernel information on how decentralized finance might evolve in the latter part of the year. While the full interviews are due out next week, here’s a summary of what I’ve gathered in the meantime:
Risk and regulation:
While there seems to have been institutional adoption In college With years out on the horizon, there is growing reason to believe that big investment bank money may finally be moving around in the very first DeFi pool.
As things stand, everyone I spoke to is unanimous about firms showing genuine interest in finding ways to get involved, but not everyone is sure exactly what this looks like or how it should be handled by regulatory and regulatory authorities. How to terminate from the point of view of custody.
FTX and Alameda Research’s decapillionaire Sam Bankman-Fried (who notably had no security guards, despite bitcoiners being orders of magnitude less like Sailor roamed around with a mobile rugby scrum — or, wait, maybe Sam Very good The security guard in which I never saw them?) described the dynamic as similar to that of a college couple, with one party “waiting” for the other.
“We’re going to be ready, we’re going to feel it, a lot of conversation, a lot of open talk about our feelings and desires,” he joked.
From their perspective, FTX is ready to flip an “on” switch and provide a gateway to whatever service institutions they want. However, the work feels more like an exercise in empathy than business: it involves lengthy conversations about what institutions want, in fact—higher yields, exposure and custody on the dollar, than someone to meet client demands. Kind of on-ramp – but when customers say “we want to do crypto work,” what do they mean and what’s actually possible? Everybody has questions. Everyone is in their feelings. For now, Progress largely looks like a firm on an exchange and trading some crypto.
The folks at DeFi expressed a similar sentiment. Pseudonym year finance security specialist “Doggy B” formulated the odds for joining as one of singular, personal preference: whether or not an institution is involved depends on the risk tolerance of the lead attorney at the particular institution. – A state of affairs that seems absurd given the possible amount of money in the game.
— dog speaker banknote (@fubuloubu) 6 June 2021
The problem here is clear: the regulatory framework at the moment is completely sound and the fury represents nothing. Elizabeth Warren Said some asin things the other day, and at one of the familiar agencies Googled Defy and got upset about it. This is the sort of thing that can be designed specifically to intimidate lawyers looking to make the leap.
It’s good to remember that regulatory winds are always changing, no matter how stormy they look at the moment. Any real law would be subject to rounds of hearings and testimony, and barring some sort of draconian executive order, more level-headed heads like Chris Giancarlo would have a chance to weigh in.
Continuing on in my interview with the former chairman of the CFTC, I was thinking about sitting it down with the enemy. Rather than a straight-up regulator obsessed with rules, however, my impression of Giancarlo was that he is quite agile and creative with his thinking.
He framed crypto regulation in the context of a broader legislative trend over the past 30 years: lawmakers trying to keep up with the Internet.
“The big observation is that the Internet is a multi-generational evolution. It started with information, decentralized information […] And now it’s turning its eyes on finance. Don Tapscott talks about the Internet of Value, and the Internet of Value has many elements, but two of them are stablecoins and blockchain-based [currencies], and DeFi, when it comes to financial institutions.”
Where the fight over decentralized information came with built-in protections for the public – because of First Amendment rights, there is no “Ministry of Information”, as Giancarlo puts it – the fight over decentralized finance will be tough, as there are dozens and dozens of regulatory bodies to contend with. Will happen.
However, he framed digital currencies as “inevitable” – a technology that would progress and eventually prevail, despite anti-regulation.
“You cannot stop the march of technology in time, and if you do, you will become a backwater.”
I am delighted that he is leading the research at the US CBDC, and find his framing useful when trying to evaluate these short-term outcry and murmurs.
VCs keep spending:
Here’s an under-reported quality of this bear market that makes me wonder if all the talk about supercycles can be on point: Even with a 50% pullback across the board, VCs still make big money on quality projects. are ready to spend.
In 2018-19, the money simply disappeared. I’ve heard stories about eight-digit gains in December that flopped in January – probably because the funds themselves flopped. Dozens, if not hundreds, of companies went down, and where a whitepaper could once bring in millions, suddenly a full product bid couldn’t hold up with real users.
In Miami, however, the checkbooks were out. I spoke with Jack Lipstone and David Lucid of Rari Capital, as well as “Titan Ink.” Regarding the upcoming NFTY Labs on current capital conditions, and both expressed interest in preventing more interest than trying to increase it.
The most important thing is not that money is lying around, but that the funds and the projects they are investing in are also more mature. At one point Raari was $110 million in net worth, and NFTY Labs has a working product – slick-sounding NFTs that allow subscription and gated community access. Money, meanwhile, is reportedly focused on the future – the dynamic and utility NFTs, and the extremely bright teens at RARI, both bet on the future.
Don’t know if that means we’re in for a bounce back any time soon, but builders continue to build and funds are ready to support them this time. In terms of fundamentals, DeFi is healthier than ever.