TOP QUESTIONS TO ASK AT FRANKFURT’S CRYPTO ASSET CONFERENCE 2020 #CAC2020
By Theo Goodman
Tucked in the shadowy underskirts of big banks such as Deutsche Bank, known (ostensibly) for always being on its best behavior, Commerzbank which has been dethroned from the DAX30 while being 15%-owned by the German government, and even the headquarters of the European Central Bank (ECB) where they think up new plans in experimental negative-interest-rate policies…in the hallowed yet money-soaked shadows of these Ivory Tower-like institutions, there lies the Frankfurt School of Finance & Management.
’Tis the time of the year when people from far and wide gather, mingle, and congregate at the Crypto Assets Conference to hear about the future of “crypto assets”. This year will see a concentration on custody solutions, Decentralized Finance (”DeFi”), and current regulations around blockchain something something. Since past years have shown little if not zero critical questions being asked at the event, in the media covering the event, or in the for-speakers-only dinner, let us now have a look at some questions which could be asked, and then ask ourselves: Why aren’t we breaking the spell and the silence to ask the hard questions?
“DeFi” ~ Hot as Hot Can Be Right Now
Decentralized Finance or “DeFi” rolls right off the tongue in nearly every conversation around Etherium (ETH) these days. In general, “DeFi” is pooled peer-to-peer (p2p) lending, and often involves a “stablecoin” such as Maker DAI. While interest that can be yielded is quite high, considering the current interest rate policy by our friends at the ECB. No KYC required, No AML required, just deposit ETH to get DAI and earn interest. While it sounds simple there are many difficult-to-quantify risks involved, such as error in the smart contract code, liquidation cascades, and an unclear policy for future interest rates, as you can read in my article “Stable Coins are so Hot Right Now” (Recht Innovativ Springer Verlag)
Let’s not put the carriage before the horse, however. Is DeFi really “De” (decentral), and who decides the interest rates? Who controls the smart contracts that can be updated? Concretely, let’s have a look at the MakerDAO, which uses on-chain governance to make decisions regarding interest rates and more. To vote you stake the token Maker MKR and the supply of MKR is heavily concentrated, So much that some recent votes could have been decided by only 2 or 3 addresses working together. MKR Token on ETH Scan
Questions: Can anyone really call DAI Decentral when the goverance can eaisly been dominated by a few MKR addresses?
What steps have been taken to avoid goverment capture of the MakerDAO goverance system?
BUT WAIT THAT IS NOT ALL!
You might have heard of the most recent DeFi “attack” which in reality was a form of arbitrage. There is a big discussion on if this “attack” should have been rolled back, yes you heard right, roll back transactions and trades that were part of a “DeFi” (read aloud please all together now: DEcentralised FInance). While the trade was quite complex, it did not break any rules, wasn’t a hack, and simply took advantage of the rules that were set by the DeFi systems available.
Question: Was the bZx trade an attack or arbitrage?
What is the future of flash loans in DeFi?
(Anyone that has no opinon on these questions should not be anywhere near a DeFi talk much less panel, so ask away)
When and Where to ask?
Monday 16:40–18:00 Audimax
DECENTRALIZED FINANCE (DEFI)
Keynote: Decentralized Finance: Policy Challenges and Opportunities — What Does the Future Hold
Panel Discussion: Current Trends In DeFi — How Has DeFi Developed So Far? Can It Develop Into a Full-Fledged Capital Market?
Digital “programable” Euro
A nation-state with a digital stable coin version of its fiat currency is not a new concept. The idea of a so-called “Fedcoin” has been around for years, and the US Federal Reserve has conducted quite a bit of research on the concept. However, there are still a lot of unanswered questions that will need to be addressed. Since the European Union passed the General Data Protection Regulation GDPR in 2018, there have arisen major questions on how any type of blockchain Euro would be GDPR-compliant, regardless if this token is on a public blockchain such as Bitcoin, Ethereum, or a DLT-walled garden. The amount of personal metadata that can be collected with such a Euro token could be enormous.
Question: What steps are being taken to create a Digital “programable” Euro that is fully GDPR compliant?
Where to ask?
Tuesday 9:00–9:45 Audimax
Panel Discussion: The Digital (Programmable) Euro — Why, How and When?
Which side events are you going to?
What talks are you looking forward to?
In the meantime you can listen to my podcast “Late Night with Theo Goodman”