We went to the Northern Blockchain Conference in York and nobody mentioned DAI or decentralised finance.
The attendees included several top-level banks and legal firms. To our surprise, there was little awareness of DAI and decentralised finance in general.
So what is “DAI” and why is it the next step for money?
It’s a decentralised stable currency that tracks the value of the USD and is backed by ETH (Ethereum native tokens) that are provided by a network of peers. DAI’s governance is directed by the community through the MKR token. In short, it’s a currency owned by its users that is stable, with transparent governance.
It has the flexibility and speed of ETH with the stability of the USD: it can be transferred in a matter of seconds, and for pennies — even abroad. It’s highly flexible and can be integrated into any payment system — no-loss lottery or a no-loss donation to your favourite charity, etc. Simple rules can also govern transaction behaviour.
It’s also a way to bypass low-interest rates: DAI’s latest update (MCD) added a way to earn up to 8% annual return by locking up DAI (like a regular savings account). Several abstractions built over DAI also enable you to earn compound interest (aDAI or cDAI).
So why aren’t the banks involved?
The simple answer is that they can’t disintermediate themselves. They either rely on being a central authority (the central banks), or it’s completely misaligned with their business model (the commercial banks).
Then there is the tech debit to overcome: their digital infrastructure still relies on technologies that are old beyond belief — Cobol, a programming language established in 1959, is still widely used by banks.
Victoria Thomson from Barclay’s told us that maintaining their payment infrastructure is already $1 billion annual bill. This is before factoring any update or improvement. Moreover, she stressed the above point: the fundamental misalignment between their business model and future crypto-based models. It seems unlikely that banks would opt to disintermediate themselves from their customers.
Here are some other highlights of the day
Vinay Gupta (@leashless), founder of Mattereum elevated the discussion and reminded us what the end-game of blockchain is: organising international collaboration at an unprecedented scale, to tackle the great challenges of our age.
James Morgan (BLOCKROCKET) took the stage and provided a clear, crisp and comprehensive overview of DAOs.
Clive Aroskin (Gaimin) shared a compelling case as to why gamers might be the ones leading the charge when it comes to adoption:
And finally, Simon Dyson, an independent researcher gave us a sharp overview of the different risks associated with smart contracts.
Expect to see more of us all around the UK. The next stop is Manchester for the CoinFest Conference (3–5 April) — our community lead Brice will be speaking there.
Tickets are free, so if you are around, make sure to grab one.
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