Weekly FinTech Highlights

Weekly?#FinTech?highlights, with?a mix of current reports and academic papers. A major news of the week is the troubled Silicon Valley Bank with an impact on the second biggest #stablecoin #USDC, which has been suspended from trading by certain exchanges after shifting to a USD 0.88 : 1 USDC peg, thus away from the 1:1. As a contagion effect also DAI seems influenced.

Industry papers

Understanding #MiCA the EU's #crypto asset law

As an EU Regulation with EEA applicability, MiCA will be both (a) directly applicable and (b)?in force across the EU’s 27 Member States?(together with Norway, Iceland and Liechtenstein) without the need for nationally implemented legislation (though some countries might anyway choose to pass their own legislation to optimise MiCA's effectiveness and enforceability). MiCA will thereby?establish a common framework?and prevent anomalies resulting from different national interpretations. This report aims to provide?an accurate summary of MiCA.

NFT & DeFi by Galaxy

Non Fungible Token (#NFT) and Decentralised Finance (#DeFi) by?Galaxy?a deep dive into the financialsation of NFT.

Crypto by Visa

The?#Cryptocurrency?payment process, understanding the consumer behaviour of cryptocurrency platforms by?Visa.

Tokenisation of real estate (e.g. with?#NFT)

Intro to?#Blockchain?and potential benefits of tokenisation.

Glossary for Web3

The book of Jargon for?#blockchain,?#crypto,?#web3?and?#metaverse?by?Latham & Watkins?a glossary of terms.

How can #web3 help achieve the UN sustainable Development Goals? by the UN DP

How can?#web3?help achieve the sustainable development goals, a report by?United Nations(UNDP). "Although?#Web3?is often referred to as a group of technologies such as?#Blockchain, Decentralised Finance (#DeFi),?#Cryptocurrency?and?#NFT?- ultimately?#Web3?is about changing our financial, economic, governance and innovation systems through “openness” and decentralisation." "Web1 promised a decentralised internet, but it was only useful for consuming information, Web2 allowed people become creators but has become highly centralised in a few large technology companies. Web3 offers a decentralised web run on systems secured by cryptography that spans geographical borders. This promises to change the power structures of the current web and put powerful tools in the hands of individuals and communities to give them control of their digital lives." "Organisations like UNDP can shape the development of Web3 by supporting innovation ecosystems, acting as connective tissue between organisations, developing research and advocacy, supporting governments to engage in Web3 opportunities and potentially to change ourselves and how we work, but to do all this we must be proactive."

China?#Blockchain?ecosystem industry mapping report by?Blockchain Business Bridge

With a market and policy overview, corporate applications (e.g. finance, logistics, charity), reccommendations for startups, research, education and more.

Tokenisation the foundation of Digital Financial by?Fireblocks

#Blockchain?is changing the way markets operate. While digital-native assets such as?#Bitcoinand?#Ethereum?have garnered the most attention in the past few years, the concept of?#tokenization?will promote growth and inclusion in financial markets more broadly.?

Migrating traditional assets to blockchain and wallet infrastructure has game-changing benefits,?including reduced settlement costs and increased transaction security, speed, and transparency.

Tokenization use cases include the commodities, debt securities, equity securities, and real estate markets. As the tokenized asset market expands, it will enable these assets to be used in new and innovative ways.

Tokenomics deep dive by?Binance

#cryptoassets?the guide to?#bitcoin,?#blockchain, and?#cryptocurrency?for investment professionals by?CFA Institute.

Decentralised Autonomous Organisation (#DAO) Toolkit by?World Economic Forum

Including what is DAO, operationa, Legal structure, governance and more.

#Crypto?Asset and?#Blockchain?in Switzerland ?????by Lexology

Crypto Outlook 2023 by Coinbase

#Crypto?Regulatory Outlook 2023 by?Coinbase, with a focus on?#bitcoin?and?#ethereum,?#stablecoin,?#DeFi, regulatory framework in US, Europe (#MiCA), Switzerland, UK, Asia, Lightning network, Level1 & L2 landscape,?#NFT

Decentralised Finance (#DeFi) explained with the use case of a Decentralised Exchange (#DEX) by?ABC Research

FED's thought on Crypto Ecosystem

Thoughts on?#Crypto?ecosystem by?Federal Reserve Bank of New York "To me, a?#cryptoasset?is nothing more than a speculative asset, like a baseball card. If people believe others will buy it from them in the future at a positive price, then it will trade at a positive price today. If not, its price will go to zero. If people want to hold such an asset, then go for it. I wouldn’t do it, but I don’t collect baseball cards, either. However, if you buy crypto-assets and the price goes to zero at some point, please don’t be surprised and don’t expect taxpayers to socialize your losses." by Christopher J Waller

The ultimate guide to?#stablecoins?by?SupraOracles

Including Asset backed, Over-Collaterlaized, Signiorage-Based and Delta-Neutral Stablecoins. With conclusions for future research.

Academic papers

Corporate Governance on?#Blockchains?

Abstract: Blockchains represent a novel application of cryptography and information technology to age-old problems of financial record-keeping, and they may lead to farreaching changes in corporate governance. Many major players in the financial industry have began to invest in this new technology, and stock exchanges have proposed using blockchains as a new method for trading corporate equities and tracking their ownership. This essay evaluates the potential implications of these changes for managers, institutional investors, small shareholders, auditors, and other parties involved in corporate governance. The lower cost, greater liquidity, more accurate record-keeping, and transparency of ownership offered by blockchains may significantly upend the balance of power among these cohorts

Decentralized Finance: On?#Blockchain- and Smart Contract-Based Financial Markets by?Fabian Sch?r

Abstract: The term decentralized finance (#DeFi) refers to an alternative financial infrastructure built on top of the #Ethereum blockchain. #DeFi uses smart contracts to create protocols that replicate existing financial services in a more open, interoperable, and transparent way. This article highlights opportunities and potential risks of the #DeFi ecosystem. I propose a multi-layered framework to analyze the implicit architecture and the various #DeFi building blocks, including token standards, decentralized exchanges, decentralized debt markets, blockchain derivatives, and on-chain asset management protocols. I conclude that #DeFi still is a niche market with certain risks but that it also has interesting properties in terms of efficiency, transparency, accessibility, and composability. As such, #DeFi may potentially contribute to a more robust and transparent financial infrastructure.

Some simple economic of?#Blockchain

Abstract: We build on economic theory to discuss how blockchain technology can shape innovation and competition in digital platforms. We identify two key costs affected by the technology: the cost of verification and the cost of networking. The cost of verification relates to the ability to cheaply verify state, including information about past transactions and their attributes, and current ownership in a native digital asset. The cost of networking, instead, relates to the ability to bootstrap and operate a marketplace without assigning control to a centralized intermediary. This is achieved by combining the ability to cheaply verify state with economic incentives targeted at rewarding state transitions that are particularly valuable from a network perspective, such as the contribution of the resources needed to operate, scale, and secure a decentralized network. The resulting digital marketplaces allow participants to make joint investments in shared infrastructure and digital public utilities without assigning market power to a platform operator, and are characterized by increased competition, lower barriers to entry, and a lower privacy risk. Because of their decentralized nature, they also introduce new types of inefficiencies and governance challenges.

Blockchain disruption and smart contracts

Abstract: #Blockchain?technology provides decentralized consensus and potentially enlarges the contracting space through smart contracts with tamper-proofness and algorithmic executions. Meanwhile, generating decentralized consensus entails distributing information that necessarily alters the informational environment. We analyze how decentralization affects consensus effectiveness, and how the quintessential features of blockchain reshape industrial organization and the landscape of competition. Smart contracts can mitigate informational asymmetry and improve welfare and consumer surplus through enhanced entry and competition, yet the irreducible distribution of information during consensus generation may encourage greater collusion. In general, blockchains can sustain market equilibria with a wider range of economic outcomes. We further discuss the implications for anti-trust policies targeted at blockchain applications, such as separating consensus record-keepers from users.