The Open Finance Protocol Ecosystem
What? Where? Why? And what’s on the horizin for Ethereum.
Ethereum… Open Finance Protocols?
Ethereum: The world’s leading software enabled blockchain.
Open Finance Protocols: Transmutation of value with Internet native systems: Banking, Investing. Loaning, Speculating and Public Goods
Decentralized Finance: Ethereum native dApps experimenting with financial tooling smart contract architecture — e.x.flashLoans by Aave to streamingMoney(0x) by Sablier and stableCoins by MakerDAO.
Internet Native Programmable Money
Ethereum is a public blockchain. The world’s leading public blockchain by most active developers and highest number of Decentralized Finance experiments. Smart contracts is the canonical term for cryptographically enforced software running on public blockchain infrastructure.
Collections of feature specific smart contracts are “ decentralized finance”.
Smart contracts enable experiments like real-time loans and value streaming for emerging digital currencies like ETH and DAI.
A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.
Software Money. More Cryptography. Less Bankers.
Digital currency will democratize finance.
The intersection of Digital Currency and Internet Culture is Open Finance.
Current fiat systems are not a completely optimized, socially adaptive means for wealth management. The Open Finance Protocol will include the four essentials: Banking, Investing. Loaning, Speculating… but also include a fifth component. Public Goods.
New value centric economies will be crafted using the Open Finance Protocol.
Internet Money Right Now. What’s Happening?
Decentralized Finance experiments are here. Ethereum is powering them.
Just recently 1 Billion Dollars ($1,000,000,000) of cryptocurrency was “locked up” using decentralized finance protocols. Another 1 Million ($1,000,000) is now collectively earning interest at PoolTogether, and digital currency is even growing new trees at rTree powered by rDAI.
The movement is real. The experiments are happening.
Welcome to the future - It’s 🦄 fabulous!
The 5 Future Open Finance Protocols
The Open Finance Protocol will include 5 distinct classification categories. Each one a DNA Set in the future Ethereum Ecosystem Taxonomy Catalog™
Transmuting value in digital ecosystems.
- Banking
- Investing
- Loaning
- Speculating
- Public Goods
The 5 Open Finance Protocols will enable mainstream Ξ Digital Currency
Simple. Right?
The 4 traditional financial protocols (Banking, Investing, Loaning and Speculating) are great. The addition of Public Goods will enable new, more value aligned digital communities, unlike anything we’ve seen before.
The intersection of the 5 Core Open Finance Protocols will set the stage for the future Internet Native Financial Systems. Enabling new ways to manage money, resources and value, both as an individuals and communities.
Hot Take: In the “financial instruments world” public goods is a “separate” protocol (Government) for managing individual, community, state and nation economic vitality. Bad architecture design in my opinion.
Better integration is required. More robust Commons. Better business.
How Open Finance Impacts the Game Map
Two game theory meta optimal strategies will likely emerge in the “Ecosystem Era” epoch powered by the Open Finance Protocols.
A contraction in the engineering and maintenance of high-risk core protocol components (Banking, Investing. Loaning, Speculating, Public Goods) and an expansion of Web3 product development.
- Contraction
- Expansion
Decentralized Finance Experiments
A growing number of potential Open Finance Protocols are emerging from within the decentralized finance movement. Everything from long-term lending, flash loans and even undercollateralized borrowing. Fascinating!
- Compound,
- MakerDAO (DAI + SAI),
- Uniswap,
- Aave,
- rDAI,
- Open Bounties Standard,
- Sablier,
- Rocket,
- Rho,
- and many, many more…
The Future of Open Finance Protocols
What’s on the horizin for Open Finance Protocols and the Decentralized Finance movement? A lot is happening! It’s still early in the game. But the game map is getting bigger.
The Predictions
First, the Ethereum blockchain will continue to be the leading platform for experiments with programmable money and decentralized finance function stacking.
Second, two complimentary, but diverging “meta strategies” will arise for product development for Open Finance Protocols and Decentralized Finance Applications.
And finally, the legal regulatory landscape will change significantly in the next 1–3 years. Enabling legitimate businesses to build amazing products!
Supporting Evidence, Conjecture and Resources
Existing Evidence
Decentralized finance is booming on Ethereum. It’s likely to stay that way.
Evolving Conjecture
A likely trajectory of the future of the Ethereum decentralized finance.
A new global value system, powered by audited and formally verified smart contracts will process trillions of dollars in value — for everyone from large financial institutions to a new wave self-managing financial tools.
High risk. Better protocols.
Protocol Insurance will be a thing.
Expect to see either both consolidation and collaborative strategies be relevant for the organizations, businesses and decentralized autonomous organization crafting these protocols.
Companies will be hyper competitive and strive for complex coordination.
It’s going to be fascinating!
Expert Resources
The Security and Exchanges Commission will say a lot of important things.
HyperCapitalism Experiments
For-Profit Limited Liability Decentralized Organization
The LAO will (hopefully) be a large-scale experiment in using a limited liability entity managed by smart contracts to organize for-profit commercial endeavors. We’re bringing to life ideas that have been percolating around the Bitcoin and Ethereum ecosystems over the past seven years.
Goodbye outdated financial tools👋 You won’t be missed.
Hello EthereumEconomicEcosystem™ 🤗 you look great!
