BlockProf

Dubai > EU Ban, Dr. Tascha, SBF Speaks

Mar 14

Dubia is Open For Business

Dubai recently adopted a law to regulate the crypto sector. Good for you!

That was close, too close

Europe, on the other hand, is busy threatening the digital asset sector. An effort in the EU parliament to ban proof of work blockchains like Bitcoin failed today on a vote of 32-23, but never should have been considered in the first place.

The Latest from Tascha Labs.

Dr. Tascha has a PhD in economics and has also fallen down the crypto rabbit hole with us, I am always interested in what she has to say.

And here is Dr. Tascha’s econ 101 for crypto:

Tascha @TaschaLabs

A Crash Course on Crypto Economics in 1 Hour This twitter course will help you get ahead of 99.9% of population—including all financial "experts" on TV— in understanding crypto, the biggest revolution in the history of finance Bonus lessons at end on how to think better 👇

Don’t Be Like Larry, Be Like Sam Bankman-Fried

Still can’t get over FTX US’s epic Super Bowl commercial.

The key item this week is Sam Bankman-Fried’s interview with the leading DeFi podcast Bankless today.

There were some great nuggets from that discussion notes from it below. When the FTX founder and a man who is worth $30 billion at the age of 30 speaks, I not only listen but I also take notes. Here are the key notes from that interview:

What made FTX special was solved inefficiencies with respect to collateral liquidation for margin trading that other exchanges were sloppy about, made cross-margining easier through consolidating those transactions within customer digital wallet, and more energy on regulatory engagement and didn’t give up on dialogue with regulators when others did.

SBF doesn’t think another crypto exchange competitor will come along, he thinks the next stage of competitors will be retail facing things like PayPal getting into crypto as onboarding platforms for new retail users.Inefficiencies in domestic payment systems and international remittances are the chief case for crypto and top problem he’s looking to solve though there are others. He referenced the opportunity to tokenize things that aren't tokenized today to facilitate their transfer.

Crypto could mean you consolidate all fin services into on entity, which isn’t common in US though is more common globally. He’s competing with traditional banks and with broker dealers.Contrast crypto exchanges, where the customer trades directly with the exchange, vs Robinhood with layers of intermediaries like wholesale brokers, clearing agent, etc between customer and exchange that all charge fees and obscure information.

On the future of decentralization generally, he thinks there will be centralized islands, like FTX, that will run on decentralized rails of increasingly decentralized blockchains.On question of DeFi vs Centralized Exchanges: DeFi is fine for a portion of market but will tend to have lower throughput relative to larger centralized exchanges, and DEXs in DeFi will tend to involve 200 microseconds of latency which will give centralized exchanges some advantage. But nothing against DeFi, there’s a space for that. And your retail investor swaps and other trades that don’t worry about latency as much can do well on Dexes.

SBF believes that decentralized and fully on-chain is also likely the future of social media/web 3. His view on DeFi is that DeFi thinks they are a competitor to FTX but we think we are complementary to DeFi.He doesn’t have preferences for native chains (despite the fact that he owns 30% of Solana’s outstanding tokens) but wants to be neutral between them and also support cross-chain options. His three questions for every new chain are: 1) how fast and cheap is the chain 2) how many users? 3) how decentralized is it (more the better)?When asked to comment on Layer 1 and Layer 2 competition, he noted there will always be demand for BTC and ETH, lots of cool stuff in layer 1/layer 2/ZK (zero knowledge proof) roll ups. Solana has been a leading new layer 1 innovator so far, some roll ups and layer 2s like Starkware and Arbitrum are cool, Avalanche and Matic (Polygon) has seen great uptake recently, but early to tell which chain/roll up wins.

Jack’s Crypto Survival Guide

Jack Niewold is always good for a follow, particularly for what’s happening in DeFi. Check out his crypto survival guide.