Blockchain

Protocol-backed investment accounts are a paradigm shift

Published

2 years ago

December 18, 2019

Republished by Plato

Blockchain’s version of retail investment accounts can improve yields, remove the middleman, and enable public services.

Read and subscribe to these articles on Substack.

The coming to market of “challenger banks” like N26 and Revolut, modern savings products like Goldman’s Marcus, and finance apps like M1Finance, suggests that personal finance is repositioning as generationally minded mobile applications and web apps. But blockchain’s decentralized finance version of banking and investments is not merely the next iteration of tech challengers, it is a paradigm shift.

In the near future, many interactions with blockchains will simply look like an investment account to the end user.

In the near future, many interactions with blockchains will simply look like an investment account to the end user. Activities like providing security to a public blockchain or liquidity to a financial protocol will be available in “investment account format” — just deposit any amount of dough, take some risk, and earn a return. The innovative part of this scheme is that depositing capital into the supply side of decentralized protocols is crucial for their successful operation. Just imagine if every American deposited $100 into an account for Ethereum 2.0 staking — Ethereum would have the power of an extra $32.7 billion (~1.5x current market cap) in network security, and the user can earn up to 10.3% in Ether-denominated return.

With products like M1 Finance, Millennials can borrow money from their mobile apps today.

Though currently more risky, could protocols begin to stand in for traditional investment accounts over time? This past year, the market’s highest yielding savings account by Wealthfront clocked in at 2.53% APR, accepted investments as lows a $1, and lowered costs through technological automation. Similar products from Goldman Sachs, Ally, and others are popular in the market, with customers focused on higher rates of return and Millennials under increased pressure to save 40% of their paycheck. At the same time, Charles Schwab, TD Ameritrade, and other brokerages have found themselves cutting trading fees to 0 as customers in a digital world now value transaction facilitation less than advice and other services.

Imagine if every American deposited $100 into an account for Ethereum 2.0 staking — Ethereum would have the power of an extra $32.7 billion in network security, and the user can earn up to 10.3% in Ether-denominated return.

Given how quickly tech products are penetrating personal finance, traditional savings accounts seem woefully out of date. In traditional savings, the customer makes a deposit into the fractional-reserve banking system. A bank takes the capital and uses it to make proprietary investments — notably, lending — which produce a rate of return. A small fraction of the return is shared with the customer. Drawbacks of this system include that customers can neither practically opt out of fractional-reserve banking, nor mitigate the counterparty risk of the bank without invoking expensive federal regulation and insurance. Returns for customers are dictated by providers, diluted by the need for shareholder profits, and don’t go far enough to counteract the consumer’s exposure to inflation. All in all, the scope, function, and performance of the traditional savings account leaves much to be desired in our modern context.

Comparison of traditional savings, traditional brokerage, and protocol-backed investment accounts.

In the protocol-backed investment account model, the customer makes a deposit into a set of public protocols whose economies provide a rate of return. In doing so, the customer can trades off the counterparty risk of an intermediary for the technical risks of interacting with protocols. Over time, these latter risks are mitigated by engineering as is routinely done with software. In some cases, like lending stablecoins, its possible to guarantee a nonnegative fiat return in exchange for the risks of that asset’s stability mechanism.

By going to protocols, customers remove the profit-seeking intermediary, and gross returns incur only the network transaction fees of interacting with blockchains. Because these deposits amount to a supply-side activity for a public network, protocol-backed accounts become both a form of ownership and governance in public goods and services. In the future, shifting the protocol allocation of an investment account may be a form of registering preferences, or voting, on public services.

In the future, shifting the protocol allocation of an investment account may be a form of registering preferences, or voting, on public services.

Participating in decentralized protocols through an investment account foreshadows how the simple, traditional concept of an account at an institution will eventually be completely rehabilitated. It will increase an individual’s financial self-sovereignty, improve consumer choice, and remove the middleman — all while helping to serve up useful public services like blockchains, domain registration, cloud storage, and even universal basic income systems down the line.

DeFi wallet products, empowered with breakthrough interoperability technologies like WalletConnect, are available for download today. You invest your digital assets in a decentralized lending protocol right now. In 2020, we should expect to see a lot more options and tools for interacting with protocol-backed investment accounts, while traditional products are likely to continue puttering along.

Protocol-backed investment accounts are a paradigm shift was originally published in The CoinFund Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Source: https://blog.coinfund.io/protocol-backed-investment-accounts-are-a-paradigm-shift-e0d97794e8e9?source=rss—-f5f136d48fc3—4

Blockchain

BTG Pactual becomes first bank in Brazil to participate directly in the crypto market

Published

40 mins ago

September 21, 2021

Republished by Plato

Financial institutions have been increasingly keen on being part of the booming $2 trillion cryptocurrency market, with over 13 of the world’s largest banks pushing roughly $3 billion in funding so far, into cryptocurrency. The latest major news came from Brazil.

One of the leading Brazilian investment banks BTG Pactual has been trending within the crypto community. It launched a new platform enabling customers to make direct investments in cryptocurrencies. Ergo, making it the first major financial institution in Brazil to participate directly in the crypto market.

According to local news outlet, The Rio Times,

“…the launch of Mynt, a platform that allows BTG Pactual Digital and BTG+ clients to trade directly, cryptocurrencies such as bitcoin and ether.”

Andre Porthilo, BTG Pactual’s head of digital assets, stated,

“At this first moment, we will have the two main assets of the market, but we will include other cryptos for trading over time. We will have a complete platform with blockchain-based assets.”

One thing that remained in common with different banks incorporating these tokens is the fact that they have been responding to “demand from our customers who wish to trade crypto.” This news is no different.

Plans

BTG Pactual CEO, Roberto Sallouti laid out his plan of action with this development. He opined, “As a new asset class, we will also have content to educate and inform our customers about these assets and the technology.”

Needless to say, Brazil has witnessed an immense amount of crypto traction. That said, regulators too have taken steps to curb illicit activities. As asserted by the CEO, the said bank will be regulated by both the Brazilian Securities Commission and the local central bank. Moreover,

“With the support of BTG Pactual, Mynt has fundamental differentials in security and credibility…”

Past

The said bank had previously incorporated digital assets in previous operations as well. In 2019, it launched its real estate-backed security token ReitBZ. This step was executed post-examining digital assets for a couple of years. Just recently, the bank announced collaboration with Gemini, the U.S.-based crypto exchange. Gemini provided custody services to the first Bitcoin fund issued by a Brazilian investment bank.

Where to Invest?

Subscribe to our newsletter

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.

Click here to access.

Source: https://ambcrypto.com/btgpactual-becomes-first-bank-in-brazil-to-participate-directly-in-the-crypto-market

News

Basel Committee Crypto Rules Face Backlash

Published

42 mins ago

September 21, 2021

user

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.

Click here to access.

Source: https://cryptobriefing.com/basel-committee-crypto-rules-face-backlash/?utm_source=main_feed&utm_medium=rss

Blockchain

Ethereum NFT Game Sorare Fantasy Soccer Raised $680 Million

Published

45 mins ago

September 21, 2021

Republished by Plato

Ethereum NFT game Sorare fantasy soccer just raised $680 million and it is now valued at $4.3 billion while launching a US office so let’s read more today in our latest Ethereum news.

The Ethereum NFT game Sorare fantasy soccer raised $680 million and the french startup now plans to expand into other sports as well as to onboard women’s soccer teams and US office. Sorare is an Ethereum-based fantasy soccer game based on NFT trading cards and grew dramatically in 2021 with a rising base and huge trading volume not to mention the new licensed teams in the mix. Today, however, the startup is using the momentum with the announcement of a new funding round.

NFT Game Founder, scammer, eth, cryptopunks

The $680 million Series B round values the company at $4.3 billion after a $50 million Series A round which was announced back in February and the new series was led by Japanese tech and investment conglomerate SoftBank that has a number of crypto industry dealings through SBI holdings financial services division. Sorare is focused on soccer with players from more than 175 licensed clubs like FC Barcelona, Juventus FC, and Paris Saint Germain FC as some of the most popular. Nicolas Julia, the co-founder and CEO of Sorare said that this week the company plans to expand into other sports and it will open a US-based office in the upcoming months to help “continue to grow with fans and sports leagues.” He continued:

“We have ambitious plans to keep growing Sorare into a sports entertainment giant. The new funding will be used to help us continue to grow a world-class team, expand to new leagues and new sports, and keep improving our experience for users, including shipping a mobile app.”

nba top shot

Dapper Labs’ NBA Top Shot is similar to Sorare, built around NFTs and based on professional athletes. An NFT acts like a deed of ownership to a scarce digital item so in the case of Sorare, it’s a digital trading card that can be purchased and resold with each available in limited quantity. One NFT card can even reach $290,000. Unlike Top Shot, however, Sorare has an ongoing game component and is similar to other fantasy sports in that you can choose your top players each week as well as the leagues with other users. Sorare also has close ties with Ubisoft as it took the accelerator program this year.

DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]

PlatoAi. Web3 Reimagined. Data Inteligence Amplifed.
Click here for Free Trial.
Source: https://www.dcforecasts.com/ethereum-news/ethereum-nft-game-sorare-fantasy-soccer-raised-680-million/