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November 25, 2020

DeFi Convention

The State of Play of Decentralized Finance


James Brodie, founding partner at ID Theory, and Lasse Clausen, founding partner at 1kx, joined Nisa to discuss the DeFi space. Nisa asked about the recent stress test and whether it set the space back in terms of trust. Clausen mentioned how there was a drop in volumes across the board, adding that it’s picking up again. Brodie also commented on the situation, saying:

(37:54) “We need events like Black Thursday to come around so that we can stress test the system, identify flaws in some of the protocols and ultimately strengthen everything and the whole ecosystem and optimize what are very experimental technologies.”

Ethereum with its smart contracts has been the leader in the DeFi space. Recently more attempts to bring bitcoin to Ethereum have transpired. Clausen reacted to this dynamic, saying:

(38:42) “I think it shows that pretty much every other chain is trying to connect to Ethereum, building bridges. There’s attempts now to bring bitcoin to Ethereum. And bitcoin has been around for a long time but now all of a sudden it seems to be starting to take off. I think it really shows…the strength of the Ethereum DeFi ecosystem. And I personally think it’s great that we get many different forms of collateral into this DeFi ecosystem. So, although I have maybe some reservations long-term about bitcoin, I think for the next five to 10 years I think it’s [helping] to bring different forms of collateral onto Ethereum.”

(39:24) Brodie also weighed in, saying that the tech being used works for Bitcoin but it will work for other chains, adding that Zcash is coming into the De-Fi space, which he thinks is great because one of the flaws on the DeFi at the moment is privacy, adding:

(49:04) – “Ethereum as far as I’m concerned has really captured the DeFi space. I think the composiblity within means that any developer is going to develop on the Ethereum chain. There are issues with Ethereum that it could mean that it loses its crown. I think one of the biggest threats at the moment is a contentious chain split….So you know I think the fact that Ethereum is still forkable is an issue. It’s where other chains that aren’t forkable may prosper in this area like Tezos,” said Brodie.

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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