This week, we look at:
Lending Club, the peer-to-peer lending innovator, turning off peer-to-peer lending after having a bank in its pocket
Consolidation of the UK's largest crowdfunders, CrowdCube and Seedrs, and their limited economics
The scale of the Morgan Stanley and Eaton Vance deal, creating a $1.2 trillion asset manager
The struggle of peer-to-peer models more generally, and whether the blockchain movement can overcome the Prisoner's Dilemma
We focus on the law of unintended consequences, and how making rules often creates the opposite outcome from the desired results. The analysis starts with the Cobra effect, and then extends to a discussion of the Wells Fargo account scandal, dYdX trading farming, Divergence Ventures executing Sybil attacks, and Federal Reserve insider trading. We touch on the concepts of credit underwriting and token economies, and leave the reader with a question about rules vs. principles.
I've got a gentle, data-backed story this week inspired by a great distinction made in this Techonomy article by the Chief Digital Officer at Schneider Electric. The thesis tracks three key lessons from attempting to bring large companies into the 21st century: (1) transform the core of your business instead of fumbling around at the edges, (2) digitize your processes and separately figure out a distinct digital model, and (3) catalyze a digital ecosystem from the new model. You can think about the distinction as either taking the existing business and slowly swapping out parts from human to machine (e.g., like RoboCop), or building the robot from scratch utilizing the latest platforms, markets, and artificial intelligence (e.g., like Terminator).
In this conversation, we talk with Mike Belshe, CEO of BitGo and expert technologist about custody, prime brokerage, and the evolution of the institutional digital asset industry.
I often mention that crypto is still all about capital markets trading (i.e., manufacturing) and not about wealth management (i.e., distribution). This conversation touches on where we are in the maturity of market infrastructure, the role of fiduciaries, and the path forward. If you are sitting in a RIA, investment fund, or other asset manager, pay attention!
This week, we look at:
The 10% collapse in GDP across the US & Eurozone, and how it compares with China's second quarter
The geopolitical battle over TikTok, its alleged spying, and understanding the winners and losers of the Microsoft deal
A framework for how to win in open source competition, explaining both Shenzhen manufacturing success and decentralized finance growth to $4 billion
This week, we look at:
PwC estimating that $900 billion has been wasted on digital transformation projects for enterprise, meaning finance is vulnerable
Chime is worth $15 billion in the latest round of valuation, same as $200B+ depository bank Fifth Third, which is quite the achievement
Decentralized exchange Uniswap distributing 60% of its token to the community, flipping the ownership and value accrual model
As a thought experiment -- today, if you want to save for a house, you may create a financial plan in Betterment and wait for the portfolio to accrue. Tomorrow, you may bring cashflows to a housing protocol which intermediates property markets, and build your portfolio directly into your desired goal of buying a house. Your stated selection and articulation of that goal, by choosing the housing protocol, generates value on its own through rewards, participation, governance, and various interest rate products.
This week, we look at:
M&A in decentralized finance, focusing on the Yearn protocol and its targets Pickle, Cream, Akropolis
The motivations behind such M&A, and where economic value collects
The importance of community and security, creating increasing returns to scale
In this conversation, we go through the essentials of Decentralized Finance with Kerman Kohli, who is a serial entrepreneur and the writer of the DeFi Weekly newsletter. We discuss the mechanics of issuing stablecoins, decentralized lending, decentralized exchange, automated market makers, and the increasing complexity of synthetic assets that have grown the sector to nearly $7 billion in August of 2020.
In this conversation, we are so lucky to tap into the brilliant mind of none other than Sheila Warren who sits on the Executive Committee of the World Economic Forum and is a key member in the executive leadership of the Forum’s Centre for the Fourth Industrial Revolution (C4IR), in which she oversees strategy across the entire C4IR Network, consisting of centers in 13 countries. Sheila also holds board member and advisory positions at multiple institutions and organizations including The MIT Press (Cryptoeconomic Systems), The Organisation for Economic Co-operation and Development (OECD), NGO network TechSoup and she is a Member of The Bretton Woods Committee.
More specifically, we discuss her professional journey from small claims court to NGO Aid to refugees to corporate law to The WEF, touching on rational choice theory, corporate personhood and its correlation to the growth around ESG, new substrates, DAOs and protocols, artificial intelligence, the purpose of The World Economic Forum and its impact on governments and society alike, and just so much more!
In the long take this week, I revisit decentralized finance, providing both an overview and 2019 update. The meat of the writing is the following long-range predictions for the space in the next decade -- (1) the role of Fintech champions like Revolut and Robinhood as it relates to DeFi, (2) increasing systemic correlation and self-reference in the space, which requires emerging metrics for risk and transparency, and (3) the potential for national services like Social Security and student lending to run on DeFi infrastucture, (4) the promise of pulling real assets into DeFi smart contracts and earning staking rewards, and (5) continued importance of trying to bridge into Bitcoin. Here's to an outlandish 2020!
