Although the term DeFi, short for decentralized finance, is mostly associated to crypto and the way it’s being powered by algorithms intended to run on networks subjected to smart contracts for lending purposes, we’re enthusiastic about spreading the term by promoting the implementation of dynamic processes and protocols across mature verticals in productivity areas of government, industry, commerce and service sectors, to reduce the influence of the middle man during the lifecycle of the money.
With that in mind, we as a nascent organization, have set a series of virtual events to accomplish just that. We’ve invited several young experts in crypto and of the decentralized finance space to be part of this transformational revolution in the world’s finances as speakers.
Today we have Anton Mozgovoy.
Anton, previously started at BMO Financial Group. In 2015 founded Finlyt — a company working on algorithmic installment and revolving credits. The, in 2017 I became CTO of Humaniq — a fintech company working on blockchain solution creating a financial marketplace for emerging markets. Anton’s team launched the first hybrid blockchain in production.
In 2018 became a senior partner in Investment Network Company (INC). INC helps startups and projects related to technology get access to venture capital. Anton is currently scaling Jthereum as a head of Product. Jthereum provides blockchain enterprise solutions.
DeFi as a Since we strive to expand DeFi over productivity areas that are already financialized by the Wall Street + fiat forces, we wanted to share with Anton a few of our concerns regarding the development of DeFi amid this financial crisis and transformational changes we are about to experience across the global economy. These are the questions and answers we’ve exchanged with Anton:
(DoE): Bitcoin maximalists are increasingly speaking about crypto being at the forefront of the 4th industrial revolution -and especially Bitcoin. However, some figures are showing a different reality as they’re showing that roughly 80% of BTC in circulation is under the ownership of 2% of the miners. Primarily Chinese miners.
Based on data piled up by different sources, 67% of the entire BTC supply minted and in circulation hasn’t been used so far. They’re still under custody and no one is currently using it. So, it may be possible that 67% of the BTC minted is frozen in cold wallets saving it for later?
So, being that way, how an industrial revolution can be fueled by crypto assets that are not circulating and are controlled by only a handful of actors?
(AM): You’ve touched a very interesting aspect here — the Statistics of Inequality. It touches all aspects: from market volatility (during peak prices back in 2017 average BTC price on African exchanges was 1.5x-2.0x higher than in the rest of the world due to liquidity issues); to decentralization, or better to say: centralization, as 62% of all Ethereum nodes are run in the cloud, 51% of which are hosted by AWS alone. There are a handful of academic researches on the topic of “fair” distribution. They all can be boiled down to one simple common denominator: the more people receive their share of a token early in the game, the more stable, liquid and effective the network becomes. A good example of that is a model we used back in the days at Humaniq. There was a system in place that would determine the uniqueness of a user (to allow fair limited distribution) and a system that would reward active participants (to boost liquidity). All that being said: the war of blockchains is probably not over yet.
(DoE): Publishing organizations may end up facing hard times ahead when the development of decentralized networks gets larger. Enforcing actions like DMCA takedown notices or IP infringements will be hard to enforce. What do you think will be a way for DLT/Blockchain operators to maintain a network that takes care of these legal loopholes?
(AM): Technology vs regulation. It is a long path of compromise and trial and error. In this specific example CRUD (stands for Create–Read–Update–Delete) vs CRAB (stands for Create–Retrieve–Append–Burn) concept can resolve the problem from a technical standpoint. From the governance perspective, various consensus mechanisms should allow for transparent data management and dispute resolution should any cases arise. Of course, we are still in the process of identifying the most efficient approaches to tackle the problem, needless to say, it will require a lot of errors in the process. Recent Steemit chaos is just one of the examples of how under-looked edge case scenarios affect the system.
(DoE): Since tokens’ unit of measure appears to be the USD, where every single path to wealth is heading to an exit that ends at ETH/BTC and USD. Don’t you think that transactions like these may put extra pressure on inflation rates by adding actors to chase the same amount of dollars circulating in an economy facing product scarcity due to Coronavirus?
(AM): Great question! If you look at the BTC supply vs USD money stock supply chart with the recent news from the US Fed government massive intervention, it will be obvious that the market value and intrinsic value of BTC don’t match. You are correct, while most adults are traded against BTC, the end goal of most traders is to increase their USD balance. When trading cryptocurrencies, Bitcoin’s rate of return is generally considered the benchmark, meaning if you’re going to trade altcoins, you’ll want a higher rate of return in exchange for the additional risk you’re taking on. The conclusion to take away from this is that if you choose to delve into the altcoin markets, you should seek to outperform Bitcoin, which is the sector’s benchmark. If you outperform Bitcoin, then over time your Bitcoin-denominated account balance should rise.
Come to see Anton Mozgovoy this April 14th at DeFi of Everything for Everyone, Virtual Summit 2020.
About DeFi of Everything for Everyone
“DeFi of Everything for Everyone” is a Virtual Summit set to explore ways to expand the attributes of DeFi through the real economy
DeFi represents a new paradigm that opens traditional finance by migrating issuance, management, custody and investment of crypto-related assets toward decentralized actors via smart contracts.
About DeFi of Everything.com.
DeFi of Everything is the convergence of a myriad of organizations, startups, co-founders, executives, and researchers to expand the knowledge of decentralized finances looking to augment its adoption worldwide. Please visit us at defiofeverything.com