Hi everyone,
Lately, I’ve developed a keen interest in Blockchain technology. Despite being first introduced in 1991, it’s surprising that not many people are familiar with it in 2022. In simple terms, Blockchain can be described as a distributed database or ledger shared among the nodes of a computer network.
My thoughts:
Its currently a bear market, and most things have been breaking across the Layer 1 landscape. Solana stopped producing blocks, Fantom experience high downward pressure due to 500m in cascading liquidations, even Ethereum experienced high gas prices due to BAYC’s otherside mint.
However, never have I been more convicted of this asset class, and of the mass adoption that is to come. It could even be argued that these stoppages, exploits and problems we see across L1s may be a bullish case for the long term as protocols improve. Its a great way to stress-test the ecosystem now so that we can prepare for the next wave of mass adoption from the next billion users.
People often ask me why DeFi, why crypto, why blockchain. And the answer to that is complicated. Maybe its because I talk so much about it, but I frequently hear “not everything is about blockchain”. And while that is true, I see a future where MOST things will be, its just that this may not be apparent on the front-end.
As digital assets and blockchain increase in prevalence (whether we are aware of it or not), we are shifting towards a new digital landscape. It is an entire shift from Web2 to Web3. We are transitioning from reading, writing, to reading, writing and owning. Ownership is the key which separates the two, and Web3 seems likely to be the new world order. This has repercussions on multiple facets of our economy and even our society. For one, we will probably start to see the financialisation of everything, I am not sure if this is good (or bad), only time will tell. But tokenisation is such a powerful concept. NFTs gained traction through JPEGs, and it will be inevitable that we start to see it permeate into music, real estate and other aspects of our livelihoods.
The question here is, are people seeing it? and more importantly are we ready for it? Are we overly focused on transitory price targets and missing the entire paradigm shift? While retail investors are transfixed on prices, institutions are taking big strides towards adoption and integration of blockchain on the backend. It actually looks like what has been heralded by Bankless as a “DeFi mullet” — traditional finance on the front but DeFi at the backend — may actually come to pass.
Recently, two protocols have stood out to me in this aspect. Goldfinch Finance and Centrifuge leverage on DeFi to drive real world impact. In emerging markets, the cost of capital can be high due to the lack of data (as much 20% within SEA). Goldfinch partners with fintech companies to underwrite credit for emerging-markets putting downward pressure on costs and driving greater financial inclusion. This is sustainable yield through integration with Real-World Assets (RWA). While there are risks involved in this, I wanted to demonstrate that these are the practical application of DeFi.
