The blockchain world is currently obsessed with defi. In the past few months, billionsin digital value have been staked, swapped and farmed in radical experiments using liquidity pools, automatic market makers and decentralised exchanges.
Defi is easily belittled as a collection of scam-riddled projects powered by magic internet money. Perhaps. But more optimistically defi is a spectacle of entrepreneurial discovery.
Originally a post at Cryptoeconomics with the RMIT Blockchain Innovation Hub team.
The financial sector exists solely to smooth economic activity and trade. It is the network of organisations, markets, rules, and services that move capital around the global economy so it can be deployed to the most profitable use.
It has evolved as modern capitalism has evolved, spreading with the development of property rights and open markets. It has grown as firms and trade networks became globalised, and supercharged as the global economy became digitised.
Decentralised finance (defi) is trying to do all that. But just since 2019, and entirely on the internet.
Blockchain-enabled smart contracts can change how we exchange value over the internet. We now have the technology to code agreements into blockchain protocols, enabling those agreements to self-execute when particular conditions are met. This execution happens without relying on centralized intermediaries—such as banks or governments—but rather through decentralized blockchain networks.
Right now, economies around the world are frozen in an attempt to deal with the COVID-19 pandemic. Governments have pulled every policy lever to keep it that way, for the time being, to limit the spread of the virus. Many people think that the economy will be unfrozen just like we would turn a machine off and on again. But unfortunately economies don’t work like that—unfreezing won’t be nearly as easy as many assume.
Blockchain technology offers several benefits for the world’s industries and supply chains, but as investment grows, there must be a simultaneous increase in robust international policy coordination, Darcy Allen writes.
Bitcoin was invented in 2008 by Satoshi Nakamoto as a censorship-resistant cryptocurrency built for the internet. With regular fiat money centralised bodies such as banks and governments control the records of who owns what. For bitcoin those records are held in a decentralised blockchain. Blockchains are updated and maintained by a decentralised network. To ensure the transactions and records are correct, economic incentives to continually drive the blockchain network towards consensus. Continue reading →
[Together with Alastair Berg and Brendan Markey-Towler this article was published at Machine Lawyering]
As goods move from producers to consumers, information about those goods must travel with them. Where did a product come from? Is this wine fake? How fresh is this lobster? Modern supply chains, however, are remarkably long and complex. This complexity makes it costly to produce trusted information about goods. Blockchain and other distributed ledger technologies are poised to help lower information costs, potentially expanding and reshaping global trade. Continue reading →