November 18, 2021: TradFi 🤝 DeFi 🏦🦙
@newmichwill Sygnum Bank Podcast Hints at Money Lego Trends
An interview with Curve’s chad founder @newmichwill is always worth a listen.
In this case, in an interesting tidbit towards the end, he is asked what he’s most excited about on the horizon. He responds:
There is a lot of potential in interaction between DeFi and Traditional Finance. If traditional finance is allowed to touch the crypto world in any way, then actually one can leverage composability to build very interesting financial products which are hybrids between decentralized and centralized in quite unexpected ways.
Note that he’s bringing this up on the Sygnum Bank podcast, which is, by all outward appearances, a bank. Egorov continues…
Traditionally one had to work with banks… to make one product as a whole which is kind of launching within the bank. But what if you split that one product between multiple functionalities and then you can actually make something which a systematic product, with traditional finance doing TradFi parts and DeFi doing the DeFi part. And then in DeFi world it’s all kind of assembled together. Basically in Defi + Ethereum it’s all called money legos, right? And so apparently, if there is one lego piece which is allowed to interact with TradFi, you probably can build something already with this lego piece being in. And that’s not something being built yet, because it’s probably still more involved than just writing code… but that’s something really exciting.
Sygnum Bank is not the sort of legacy bank based in the rapidly anachronizing United States of America. They bill themselves as “the world's first digital asset bank” with exposure to crypto forward by holding “both a Swiss banking licence and a Singapore asset management licence.”
Maybe Egorov has big plans in mind? The last time Egorov saw something nobody else did… within two years it had amassed $20 billion in assets.
Could TradFi and DeFi embrace sooner than we think? Stuck in the United States, our vantage point on this subject is obscured. The future is being built outside our shores, and perhaps institutions in other countries will embrace things more quickly than our burger franchises.
We note there’s been an uptick of TradFi attention towards DeFi lately. See also, Convex in Forbes.
If things tip on this front, they could tip fast. Instead of regular people risking prison for using crypto, what if financial advisors risked prison for not advising crypto?
Still, from my perspective, I’m convinced that TradFi simply lacks interest in DeFi for whatever reason. If they wanted those sweet Curve yields, they’d throw money at their lawyers and force them to find a way. Apple figured out how to invert their headquarters into Ireland to cut their tax bill. They could figure out how to open an office in Malta or Cayman Islands or whatever could let them ape if they cared.
My bet is most of TradFi just sits on the sidelines while crypto goes through a few more 10x cycles. By the time TradFi FOMOs their way in, they’ll be the short stack at the table and nobody will care that they’re joining.
But hey, I’m often wrong. Let us know your thoughts in the comments.
Anyway, while TradFi plays the wallflower, the smart money that is the rest of the DeFi world is still rushing to Curve. Curve rebounded fairly quickly after the latest crypto market tumbles.
Why the activity? Perhaps because the flywheel ecosystem has been spinning like mad lately. Look what’s happened in just the last few days.
Frax is hosting a menage a trois:
Yearn delegated their boost to Convex:
Even Saddle is trying to get back on the horse:
In true Saddle fashion, though, naturally they’re launching it by recycling code:
Curve was the most traded asset on Perpetual Protocol over the past month.
Badger is starting to get their flywheel strategy in place.
All the while, Curve’s TriCrypto2, which by itself would rank a top 50 protocol on DefiLlama’s TVL charts, has been demonstrating just how wild Curve v2 could become.
Better move faster TradFi. These pools are filling up.
Read Disclaimers! Author is a flywheel maxi.