Ethereal Summit 2021 Day1 DeFi & NFT (2021 May)
Discussions at Ethereal Day 1 were on recent hot topics such as NFT, DeFi and usual crypto currencies.
Growth through DeFi
Growth of DeFi is the leading indicator of industry growth of blockchain. At Ethereal, Olaf Carlson-Wee, who leads Polychain Capital and is also known the first employee at CoinBase, shared his view on future of DeFi as below.
DAO Finance
Asset allocation: Among DeFi DAO finance field is expected to lead the growth. DeFi market cap has grown from $1bn to $75bn in recent one year. Unlike traditional finance, DeFi has not yet established knowhow in allocating asset to where needed.
Improvement in UX: Catalyst for the growth is improvement in UX. Iconic DeFi product, Uniswap, is not so much of user friendly yet. UX must be easy for everyone. That should increase number of users, and enable authority to accept for further growth.
Government and Regulation
By its nature, blockchain stands in global scale instead of a country level. Therefore, one country tightening regulation on blockchain would not stop the growth of it. Next Silicon Valley does not need to be located in California but Beijing. Interestingly blockchain is not designed as winner takes-all, but as benefits for all participants. So, instead of tightening the regulation, we should work together for coexistence.
Listing and Fund raising
Ahead of Ethereal, CoinBase has direct listed on Nasdaq. Olaf at Polychain shared his view that on-chain listing tied to CoinBase equity such as USDT tied to USD would have maximized the value. He also emphasized that would be better in terms of CoinBase philosophy as well.
Now and future of NFT
Mark Cuban, iconic investor in blockchain industry and owner of NBA basketball team talked on NFT. He stated himself as a NFT collector and also runs digital art gallery “Lazy.com”.
Is NFT market in a bubble?
According to Mark, it cannot be in bubble by stating the definition of bubble as it occurs when demand exceeded against limited supply. In NFT, it can create infinite numbers of NFT arts theoretically. It currently attract many speculators and newcomers who is flooding the market, but is expected to seize more demand from the collectors in each product.
Attention in regulation around NFT
Panelists who is familiar with law warned that owning NFT does not allow commercial usage of it as commercial usage rights are completely separated.
Crypto currency market trend
We cover the recent trend in crypto currency.
Trend shift from BTC to ETH
During discussion with Mark Cuban, he pointed out the shift in demand from BTC to ETH. Most of blockchain network is currently based on Ethereum network and is believed to continue. When taking an example in staking, most positions are taken against ETH. He told that as long as this trend continues the demand in ETH will continue to increase.
Definition of institutional investors
Definition of institutional investors in crypto currency is changing. A few years back, it used to indicate up to $10 million, but now indicates at size of up to $100 million. And it is estimated to grow bigger with ETF being listed in future. ETF often enables larger investors such as pension money tradable in crypto currency. Some pension funds’ AUM (Assets under management) could get up to $100 billion, which would impact the market even with the partial inflow.
Exchanges
Criteria of listing new crypto currency: With CoinBase listed in Nasdaq, transparency in managing crypto exchanges, such as the criteria in listing new crypto currency, will be needed to differentiate one to another.
Authority: CoinBase stated that they would protect their customers privacy.
Anti-Trust Law: To the concern of limiting free access to the market as Apple and Google hold dominate market share in application market, ConBase stated that it does not concern them at moment.
Often talked environment problem
Mark Cuban shared recent study showing electricity being used in gold mine surges bitcoin mining. He also told that TradFi, which holds and manages high rise in city center along with employees commuting, would consume more electricity than bitcoin.
Privacy coin
According to Elena Nadolinski at Iron Fish, current privacy coin does not exactly offer privacy due to its difficultness of UX. She raised Zcash as an example that if it is traded in Central Exchange, there will be no privacy. She pointed out that there is alternative tracking mechanism in case of AML concern.
Crypto winter again?
According to Mark Cuban, it is unlikely to have crypto winter again due to the wider selection of derivatives products. Although some over leveraged investors like Archegos may choke on themselves, authority will improve the system under supervision of new SEC head Gensler.
