2022-12-08 · timestamps by ADAtainment
UPD 12/08/2022
- Three days into a two week fast, a whiteboard talk on RealFi, sparked by a DeFi systematization of knowledge paper at the Stanford blockchain conference.
- RealFi is DeFi with identity: it adds identity, metadata, governance, and standards and certification, with a regulatory structure on top.
- It also includes decentralized regulation, a reg tech overlay that can add reversals, freezing, and KYC without changing the underlying protocols.
- The defining feature is a user base that uses a crypto financial stack as their primary one, not degen yield farmers looking for the greater fool.
- The motivating example is a small business in Nairobi that could replace 35 percent local loans with cheap, global, self sovereign digital finance.
- Because the whole industry open sources its innovation, RealFi becomes the financial operating system of the developing world, and IO's 2023 focus.
13 entries
Recording three days into a two week fast, pushing through the hardest day on bone broth, water, and some coffee.
At the Stanford blockchain conference, Sam Werner's team presented a systematization of knowledge paper on DeFi primitives.
RealFi is a superset of DeFi, adding what a plain DeFi paper misses, and succinctly it is DeFi with identity.
Identity means dapps and the people using them carry an identifier, not necessarily a real world one, but enough to be a distinct individual.
Metadata tells the story behind funds and transactions, and governance is how a DEX, stablecoin, or oracle gets upgraded and by whom.
Standards and certification are industry accepted practices for bridges, market making, asset issuance, and how data is produced and stored.
A regulatory structure sits on top scoped to a jurisdiction, and the regulator's real problem is automating it while keeping it decentralized.
Decentralized regulation is a reg tech overlay adding capabilities like transaction reversals, freezing, and KYC without changing the base protocol.
The meta property of RealFi is a user base that uses it as a primary financial stack, not degen yield farmers playing a sub zero game.
A small business in Nairobi paying 35 percent for a local loan, or denied one entirely, could instead borrow globally at very low fees.
RealFi gives users total self sovereign control of identity, reputation, and asset storage, the financial operating system of the developing world.
Because innovation is an industry effort that gets open sourced, dexes will beat centralized exchanges on speed and security within a few years.
RealFi is IO's major focus for 2023, aiming to create an industry definition and move beyond the degen DeFi movement.