I'll start a thread reporting on today's closed-door DeFi for Institutions event.
Keynote from @biancoresearch:

"What's holding TradFi back from DeFi? It's the fear of regulation."
@biancoresearch

"If you run it right, completely decentralized, with a DAO, there is no person..." who can be held responsible by a regulator.

Oh really? 😬
@biancoresearch

"CBDCs have a big problem on their hands... the Fed is just the umpire, they stand behind the catcher, they can't stand inside the batters box at the same time."
Stablecoin panel starting up incl MakerDAO, Boston Fed Reserve, Terraform Labs.
@RuneKek says that regulators are not considering decentralized stablecoins to be a stablecoins.. they are considering them as volatile cryptocurrencies.
@RuneKek Robert Bench of the Boston Fed says the Fed will learn a lot of important lessons from watching the development of DeFi stablecoins.
@RuneKek

"Most people don't need the advantages of blockchain... the reality is that most people are never going to care about it or notice it. DeFi is really going to run on the back-end."
Boston Fed:

"For a CBDC to be compelling, it needs to be fast... tens of thousands of transactions per second... 300m personal wallets... highly secure... will be the single-most hacked piece of software in the world."

One wallet per person? Here we go.
@RuneKek

"If you're going to engage with the real world, then you need to engage with the regulators... you have to follow the law... it's very important to educate the regulators ourselves... we've been doing that for many years... we've been speaking to regulators."
@RuneKek says that the focus right now is on finding a way to meld DeFi with the legality of real-world assets, and this is why it's so important for DeFi to be working with regulators.
@abandeali1

"The biggest innovation of DeFi is permissionless access to liquidity."
@SergeyNazarov says that DeFi is all about generating yield. More yield than is possible in traditional markets.

He also says that some form of on-chain identity will be required before institutional adoption can happen.

He says that @Chainlink is working on this.
@SergeyNazarov says blockchains force transparency and clear trust assumptions.. but he wouldn't want asymmetrically larger actors w/ larger budgets to manipulate DeFi infrastructure to take money from weaker actors.. i.e. replicating HFT world in DeFi.
👆 isn't this the whole reason that institutions want to get into DeFi in the first place?
@abandeali1 says that "the risks in DeFi are completely transparent".

Me: No they're not.
Time for the VCs!
@hosseeb says that 15-20% ownership is what VCs seek in a traditional market, but that doesn't happen in crypto, and there's no major protocol where a single party owns 15-20%.

What he's missing is that you don't need 15-20% in crypto to control DeFi outcomes.
@Melt_Dem says she didn't anticipate how quickly DeFi would evolve and grow, and how quickly the abstraction of DeFi protocols is happening.

She shouts out Outlet, which is a completely centralized app as far as I know.
I just asked a question: "5 VCs represent 42% of all Compound token ownership. Is $COMP a VC coin?"
VCs are done. Time for more the traders. And the mustache.
@fintechfrank asks.. isn't DeFi supposed to be about getting rid of the intermediaries? Why do we even need market makers?

Ricky of @altonomy says.. fuck yeah you need us. Where do you think the money comes from, bitch? (not in those words)
@TheChicagoVC says that regulatory uncertainty is keeping institutions out of DeFi.

This has been a big theme of the panels thus far.

These guys reallllly want regulatory guidance. They think it will open the floodgates.
@TheChicagoVC @fintechfrank asks.. will centralized market making entities become less relevant as AMMs take over?

@EvgenyGaevoy says.. yes. But not soon.
@jake_dwyer says that front-running is becoming less profitable over time and will eventually fade away with move to L2 - mentions fast tx's on Solana.
@fintechfrank says there's more opportunity for big players in DeFi right now because they don't have to fight with as many retail investors as they did a couple months ago.
@fintechfrank is liking my tweets about the panel while he's simultaneously moderating the panel.

Meta.
@jake_dwyer says that the winning protocols in DeFi that we *think* are established right now may not be the winners after institutional money floods in.
OK, time for Data, Infrastructure, & Insurance panel.
Esteban Castano of TRM is pitching his financial crimes surveillance service.

Anyone can spin up new protocols on any chain.. institutions need to partner with a company that knows how to find those lousy DeFi criminals wherever they're hiding!
@evabeylin is talking about @graphprotocol.. I find it weird that this is called an "Intermediaries" panel.. are these really financial intermediaries? or just ancillary service providers?
Ah, ok, a real intermediary. @FireblocksHQ
Esteban of TRM says that they market their financial crimes surveillance software to institutions, crypto businesses, and protocols.

Wait.. which PROTOCOLS are using financial crimes software to screen transactions? Tell me more..
@ASvanevik says that @nansen_ai target audience is any individual or entity that manages over $100k.

Nansen is building out an institutional team. Smart. Get that bank money.
Esteban of TRM answered my question about which protocols are using their financial crimes surveillance software.

This is totally expected, but still horrifying, tbh. Which ERC-20 projects are surveilling you?
Esteban of TRM:

"AML for DeFi is the most exciting thing to happen to AML in 2 decades."
Esteban of TRM:

TRM can determine which DeFi protocols are high risk vs low risk.

Can screen addresses in real-time before allowing them to interact with the protocol.

Work with protocols directly to show them high-risk activity.
@ASvanevik of @nansen_ai says the biggest challenge is figuring out "who are these different identities on the blockchain".

Anyone can see a transaction, but you don't know who the parties are.

Nansen wants to dox you all.
@ASvanevik @nansen_ai Up next.. the GOVERNANCE panel! Woo hoo!
@lex_node says that for many, DeFi is about increasing civil rights.. human rights.. freeing people from the influence of government and institutions.

He says this on a panel for institutions.

Still cool tho. :)
@angela_walch says that it's not just the people "playing around in DeFi" who can be harmed by governance failures.. the more links that are built between DeFi and TradFi, the more a DeFi governance failure can actually affect TradFi.
@lex_node "Chris Blec.. self-appointed DeFi Watcher.. he can be annoying but we need him"

I'm going to put that on my tombstone.
@lex_node discussing the paradox of VCs choosing voting proxies in decentralized governance.

No real disclosure around what happens off-chain between VCs and their delegates (student orgs, etc).

@angela_walch agrees that off-chain "stuff" is the worrying part of DeFi governance
@angela_walch says that the info that cannot possibly be transparent unless it's shared by the parties involved.. that's where the problems will come up.
@lex_node says that some orgs are more transparent.. shouts out SushiSwap community's pushback to recent VC proposal..... hang on, doesn't SushiSwap use off-chain voting & a multisig?
@angela_walch is skeptical about the idea of "progressive decentralization".

@lex_node says that it's already happened.. just look at Ethereum.

Me: Comparing Ethereum to DeFi DAOs is a real stretch. Ethereum was built to be permissionlessly decentralized. Many DAOs are not.
@angela_walch says that there are roles being filled in Ethereum that are concentrated points of power.

@lex_node says that nobody is *really* in control.

Me: Somewhere in the middle.
Time for AAVE FOR INSTITUTIONS!
Stani is standing us up for a more important meeting! Instead we get @chainyoda!
@chainyoda of @AaveAave

"We started asking institutions.. what's stopping them from accessing DeFi? The need for permissioning and KYC."
@chainyoda of @AaveAave

"We decided to create an Aave market which enables whitelisting."
Are stkAAVE holders serving as the backstop for whitelisted markets?
Aave.. KYC.. ya hate to see it, dontcha?
Welcome to your future. #DeFi
This is a dry run for how banks will on-board users into DeFi in a few years. Y'all do realize that, right?
AAVE holders didn't ask for it, but AAVE Pro is governed by AAVE governance!

BUTTTTT... whitelisters can veto AAVE proposals to "support their oversight over the regulatory risk and compliance obligations".
Next up.. ETF guru @JanvanEck3
@JanvanEck3 @JanvanEck3 thinks that "old world lending" is completely disreputable and DeFi could do it.

He likes the idea of real-time credit scoring & screening. "Instantaneously judge & adjust peoples' credit scores."
What's preventing institutions from coming into DeFi?

@JanvanEck3 says we need "permissioned pools" like what Aave is doing. Due to existing regs, Van Eck can't offer ETFs that lend into DeFi without KYC.
@JanvanEck3 sees 2 angles to DeFi for institutions - the "token" play and the "income" play.

He likes the "income" play.
OK.. next up.. the institutions themselves! Woo hoo!
*disruptable.. not disreputable
@NoelleAcheson says at beginning of this year, BTC accounted for 80% of trading volume. Now, it's only 40% with Ethereum growing strong.

Also seeing more DeFi-first investors.. skipping BTC as their first step into investing.
@jdorman81 says most clients just want to hold a token.. but more and more are aware of how DeFi works and want more advanced yield strategies. Lending, yield farming, liquidity providing..
Every panel asks the same question and every speaker says the same thing.

What is keeping institutions out of DeFi?

LACK OF REGULATION.
TECHNICAL DIFFICULTIES!
Summing up the rest of the institutional panel:

Users will not give a crap about what blockchain they're using. They'll just want results.

RIP trustlessness & decentralization.
Hey.. it's time for the LAWYER panel.. featuring members of @fund_defi!
@boironattorney and @jchervinsky of @fund_defi are on this panel.

DeFi Education Fund was created via $UNI governance by $UNI tokenholders.

Remember that.
Popped a relevant question into the chat.
Popped another question in there, since they're talking about FATF, VASPs, etc.
Moderator promised they'd get to my Fund questions, so I popped one more into the chat.
Been talking about the Fund for about 5 minutes but not answering my questions, so I tossed one more in there.
Ok. My questions aren't getting answered.

The events that led to the creation of the DeFi Education Fund could actually be the type of behavior that regulators would be worried about.

We do need an education effort. This unilaterally-created Fund is not the right way.
END!

Here's what I learned:

• Institutions are drooling for DeFi.
• They won't come until there's clear guidance from regulators AND KYC.
• They don't give a shit about trustlessness. ONLY permissionlessness.
• Heavy surveillance is already happening. You're being watched.

• • •

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More from @ChrisBlec

21 Jul
The top 5 @COMP delegates & their voting power:

• @a16z / 345k COMP
@polychaincap / 306k COMP
@BainCapVC / 257k COMP
@gauntletnetwork / 126k COMP
@paradigm / 111k COMP

Quorum needed to pass a vote is only 400k COMP.

VCs can control any @compoundfinance outcome.
Why does this matter?

A regulator would only need to threaten 2 of these US-based corporate tokenholders to get any change at all pushed to @compoundfinance core protocol.
This information is readily available on-chain. @voteWithTally does a great job of breaking it down for Compound, Uniswap and others.
Read 4 tweets
15 Jul
Looks like this address just attacked @THORChain for around 2400 ETH. Network is stopped while they investigate. etherscan.io/address/0x3a19…
@THORChain Prices look a little broken. Hoping that they can figure out a way to get back in balance.
Read 4 tweets
13 Jul
I just posted this "demand for transparency from @fund_defi " to $UNI governance forum. gov.uniswap.org/t/demand-for-t…
1/ Who did Harvard Law BFI discuss this proposal with before bringing it to the public? Were there discussions with or encouragement from past or current Uniswap core team members, investors, proposed committee members, or other influential backers such as Consensys?
2/ Who contacted each proposed committee member to tell them about the Fund and to ask them to be on the Committee? (This is assuming that the proposal was not the committee members’ own idea.)
Read 10 tweets
1 Jul
1/ There are a few areas of DeFi where transparency isn't just missing, but it's intentionally being withheld by parties who are seeking power, profit and control.

They are unwittingly contributing toward a future globalist financial dystopia which you will *not* like.
2/ This should matter to everyone, whether or not you understand or use DeFi - including Bitcoiners.

Why? Because the goal of this rapidly-mutating form of DeFi is to gain mass adoption. Partnerships with TradFi institutions are already forming. Momentum is picking up globally.
3/ If a mutated DeFi is successful in its mission, it could transform banking as we know it. It wouldn't be good.

Picture it: Banks could use DeFi by moving to whitelisted blockchain solutions. Picture one ETH address per person, assigned to your verified identity at birth.
Read 16 tweets

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