Reporting from the opening day of the Blockchain Hub Davos 2022 conference, Cointelegraph Editor-in-Chief Kristina Lucrezia Cornèr moderated a panel discussion focused on decentralized finance (DeFi) titled “Programmable Money Is Here – And It’s Changing The World As It Is”. we know him.”
Panelists included SwissBorg Partnerships Director Alexander Fazel; the director of Global Markets of Kraken Europe, Lucian Aguilar; CasperLabs co-founder and CEO, Mrinal Monahar; and the managing partner of Coral Capital, Patrick Horsman.
In the keynote address, Aguilar reflected on his attendance at the event two years ago, assessing the differences in receptivity and attitude towards cryptocurrency. He also noted how the prevailing narrative has evolved, stating, “The last time [había] many projects here trying to sell and present. This time when I look around, there is more talk about building, adopting and innovating.”
All his colleagues agreed with this point of view. Horsman shared that the total value locked (TVL) in DeFi was $1 billion in May 2020, but has since increased 150-fold, a healthy barometer of success for the sector in his opinion.
SwissBorg’s Fazel did a hand-raising exercise to determine their entry point into space, saying “at TradiFi people think [que] I don’t want to lose money: how can you help me maintain my wealth regardless of the markets? So it’s very risk management oriented. Whereas in DeFi, the degenerates are like ‘give me those triple-digit returns, wooow!'”
He argued that protocols in this space should adopt stricter transparency standards for risk associated with annual percentage returns (APYs), and argued that additional education could also help balance investor expectations.
Advancing that thesis, Coral Capital’s Horsman shared that the Terra (LUNA) crisis occurred in part because “they were essentially offering returns that were unsustainable, and [que] there were venture capital firms that were plucking those returns to bring an ecosystem to life.” He noted that his company decided to defund the project in November-December 2021 after its reserves modeling data predicted worrying estimates for the future.
In response to that anecdote, Aguilar shared his belief that protocols with very significant APYs in the triple digit range are most likely looking to mitigate their own high risk factor, stating:
“A lot of these APYs, I see them as a risk premium because the underlying is so unpredictable and unstable that it’s needed to offset the risk for a traditional investor.”
In relation to the ambitions of the World Economic Forum (WEF) when facing modern global challenges -climate change and the pandemic are two of the most prominent examples of recent times-, Cornèr asked the panelists how they evaluated the state of financial inclusion, and how DeFi can empower communities to reduce the damaging disparity of the current system.
Monahar stated that “I think DeFi has enormous potential to create financial inclusion,” but that to achieve visions of decentralization, there needs to be “interoperability at a truly fundamental algorithmic level.” This, he argued, will cultivate a frictionless experience that promotes communality and fosters incentives for inclusion.
He acknowledged as a positive sign the recent convergence of developers towards the Rust programming language, as well as its similarities to the software synonymous with the Internet, HTTPS.
Delving into the conversation around financial inclusion, Fazel stated that “there is no better way to gain wealth than in DeFi” and that data monetization services, such as Brave Browser, play-to-earn games, such as Axie Infinity , and play-to-move platforms, such as Sweatcoin, and the rising trend of STEPN, are providing the opportunity to “create wealth without necessarily having it at the beginning”.
The airdrop incentives offered by some of these platforms can support the inclusion of wealth in less developed countries, Fazel argued, revealing a personal story of his father – a resident of Iran, where the monthly salary is on average USD 250 – who benefited greatly from the 300 Uniswap (UNI) airdrop.
Cointelegraph representatives are reporting extensively on the World Economic Forum (WEF) and Blockchain Hub 2022 this week. Read our live blog for all the highlights and best moments from world events!
Readers of this article can watch the full “Programmable Money Is Here – And It’s Changing The World As We Know It” interview on Youtube.
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