Joining Compound as General Counsel
I’m thrilled to announce my new role as General Counsel for Compound.
Compound is building a decentralized protocol for autonomous interest rate markets on digital assets, a key piece of infrastructure for the open finance movement. In my view, open finance (or “DeFi”) strikes at the heart of cryptocurrency’s prime use case: creating a fairer, more transparent, and more accessible financial system for the world. This goal originally sparked my passion for crypto, and I couldn’t be happier about devoting my full energy to helping Compound achieve it.
Before I tell you about my new role, let me first explain how I fell down the open finance rabbit hole and why I’m so excited to join Compound.
Fed Up With Legacy Finance
I became a lawyer in the wake of the global financial crisis, and my career has been heavily influenced by it. Aside from a judicial clerkship, I’ve spent most of my professional life investigating and litigating disputes related to traditional financial services. Like a lot of lawyers in the District of Columbia, I’ve also navigated the myriad regulatory regimes that govern the financial system, and I’ve interacted with the various federal agencies in charge of administering them. My work gave me the chance to step into the kitchen of the legacy finance industry and see how the proverbial sausage is made.
I was not impressed.
At best, I would call our current financial system inefficient; at worst, malicious. You’ve likely seen or experienced this for yourself. Entrenched incumbents design business models that benefit their bottom lines at the expense of the public. Catastrophic risks are hidden from view, and bad actors who cause harm are rarely held to account. The system’s walled gardens exclude the people who need access the most, and the lucky few who are allowed to participate find the experience slow, expensive, and frustratingly complex. In short, the hulking machinery that powers legacy finance is plainly unfit for the digital age.
I’ll admit that it took me a while to wrap my head around Bitcoin, but once I did, I was blown away by its capacity to fundamentally reshape the global financial system. Here was an engineering solution to a problem that most financial institutions and political leaders seemed incapable of, or uninterested in, fixing.
I quickly became convinced that peer-to-peer electronic cash was the future: distributed software that allows anyone, anywhere, to conduct transactions at a distance almost instantly and almost for free without any intermediaries extracting rent or conducting surveillance in the process. Sound, censorship-resistant, trust-minimized, permissionless money for all.
Since then, I’ve strongly believed — and still do — that crypto’s core value proposition is its ability to bring about a revolutionary technological upgrade on money. But a new financial system needs more than just new money; it also needs to replicate and improve the full range of financial activities that support the modern global economy.
The open finance movement seeks to build that new financial system on top of Bitcoin, Ethereum, and any other cryptonetwork fit for the task.
On the Cutting Edge with Compound
What Bitcoin did for money, I expect open finance will do for all manner of complex financial instruments and markets. Many teams are building critical pieces of open finance infrastructure, such as decentralized exchanges, derivative platforms, and algorithmic stablecoins. To me, Compound’s money market protocol is among the most interesting and important. I’ll give you three reasons why I think so.
- Decentralizing the Risk-Free Rate. One of the foundations of the global economy is the risk-free rate of return: the annual percentage yield that investors can earn without any risk of losing their capital. Today, that rate is generally set through the machinations of central bankers, either by reference to U.S. Treasuries or the London Inter-bank Offered Rate. Compound offers a better way: by allowing borrowers and lenders to freely establish interest rates on digital assets through pure market forces of supply and demand, Compound’s protocol provides a risk-free rate for the new financial system.
- Promoting Control Over Personal Finances. Once upon a time, banks offered decent interest rates on deposits in savings accounts, allowing people to earn a meaningful return while keeping their money liquid. These days, with low and negative interest rates on the rise, many people are investing in increasingly risky and illiquid vehicles just to preserve their wealth. Compound’s protocol bridges the gap between the need for both liquidity and return with a positive and dynamic interest rate.
- Securing Long and Short Positions. Many active crypto users are traders and speculators looking to take leveraged long or short positions on digital assets. Unfortunately, due to the instability of some centralized exchanges, taking those positions often means significant counterparty risk. Compound’s non-custodial protocol lets traders express long and short theses without fear of losing their capital to exchange hacks or failures.
These are just a few of the use cases that excite me about Compound’s protocol. I can’t wait to see what other fascinating and novel benefits arise as open finance continues to mature.
So, what will I be doing as Compound’s General Counsel?
In addition to handling all of the company’s legal needs, my new role gives me the perfect platform to advocate for the advancement of the industry as a whole. Right now, many companies are struggling with regulatory uncertainty while we wait for the U.S. government to figure out its approach to the space. I’m confident that with the right education, regulators and elected officials will come to appreciate the revolutionary goals that open finance seeks to achieve.
I look forward to playing my part in that effort.