Crypto and DeFi: The (R)evolution is Afoot

Go to original source: Catalyst Insights

by Sune Sorensen

THE (R)EVOLUTION WILL BE DECENTRALIZED…

The global monetary & financial system is heading for a paradigm change. The next SWIFT system and financial market structures are being built all around us, from the grassroots up and with little regards for national borders and the analog reality that accompany them. The (R)evolution is afoot.

Buckminster Fuller – the savant architect and Renaissance man – stated that; “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

What has been largely considered as Millennial & Gen Z playthings are emerging as the building blocks for ‘a new model that will make the existing model obsolete’ in due time. While Crypto and DeFi have largely been looked upon as speculative assets to people in developed markets, in emerging markets they are already forming the beginning of a new financial system.

According to a recent report from Findex; “Globally, about 1.7 billion adults remain unbanked. In 2014 that number was 2 billion. Virtually all unbanked adults live in developing economies. China and India, despite having relatively high account ownership, claim large shares of the global unbanked population because of their sheer size. Home to 225 million adults without an account, China has the world’s largest unbanked population, followed by India (190 million), Pakistan (100 million), and Indonesia (95 million).”

A map of the world Description automatically generated with medium confidence

Source:https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter2.pdf

For billions of people this is the first time they can access a range of financial services and global assets. The initial wave of FinTech brought financial services onto the Smartphone, DeFi takes it to the next level. Innovation is being unleashed on a global scale, and much of it is driven from the ground up and it is decentralized. Collectively DeFi is the App that is making blockchain technology user friendly, it has the potential to be the bridge to a new paradigm.

There now is a DeFi equivalent for every traditional financial instrument and function.

A picture containing chart Description automatically generated

Source: https://consensys.net/

These instruments are still at the very early development stage, it’s more ‘cow-bell’ than ‘grand piano’. Plenty of the individual projects will no doubt falter and drop quietly by the wayside, others will soar too close to the sun and come to a spectacular demise, but some will become the cornerstones of a new foundation for our financial & market systems. It is still early.

While the Coinbase IPO – a centralized stop-gap event – got a lot of attention, the (R)evolution will be Decentralized. The quarterly volumes on Decentralized Exchanges (DEX) have been building and has reached significant levels in a short space of time. Forget the silly names and memes, the innovation is real. The network effect is underway.

The same dynamics are at play in the lending space. Mighty oaks grow from tiny acorns.

Chart Description automatically generated

Investors should avert their gaze from the ‘noisy’ spectacle of the developed markets speculative frenzy and look at the shifting sands of the larger and more consequential evolution underway. A better system has been forming – much of which is being developed and adopted rapidly by the leapfrogging populations of emerging markets as well as the younger generations in developed markets. These groups are the future. Chasing prices or building value? The choice is yours. Investors should be finding smart ways to position themselves in this dynamic space.

Disclaimer

This piece (Strategic Thoughts) does not constitute an offer to sell, solicit, or recommend any security or other product or service by Strategic Capital Advisors or any other third party regardless of whether such security, product or service is referenced. Furthermore, nothing in this piece is intended to provide tax, legal, or investment advice nor should it be construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction.

The Strategic Funds, LLC (“TSF” or “Firm”) is the owner of Strategic Capital Fund Advisors, LLC, an exempt reporting advisor (“SCFA”).

Alternative investments are speculative and include a high degree of risk. Past performance is not necessarily indicative nor a guarantee of future results.

The information presented herein is solely for informational purposes only. It is intended for the benefit of “Accredited Investors”, as defined in Regulation D under the Securities Act of 1933, as amended.

The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or a solicitation.

The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal, financial or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at TSF or the views of the Firm as a whole, and may not be reflected in all the strategies and products that the Firm offers. Any information herein has been obtained from sources believed to be reliable, but its accuracy is not guaranteed by TSF.

No representation or warranty, express or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by TSF or SCFA (or any of their respective members, directors, officers, employees, advisers, agents, representatives and consultants) as to or in relation to, the accuracy or completeness of information on this website.

No investment should be made without proper consideration of the risks and advice from your tax, accounting, legal or other advisors as you deem appropriate.

The trading of commodities and derivatives such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors. Advisory services for futures and options is available through Strategic Capital Advisors, LLC (“SCA”), a member of the National Futures Association (“NFA”) and registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a commodity trading advisor and commodity pool operator. SCA’s strategies are offered only for individuals or firms who qualify under CFTC rules as a “Qualified Eligible Participant” (“QEP”).

SCA does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Alternative investments are speculative and include a high degree of risk. The risk of trading futures and/or options can be substantial. Past performance is not necessarily indicative nor a guarantee of future results. No representation or warranty, express or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by TSF, SCA or SCFA (or any of their respective directors, officers, employees, advisers, agents, representatives and consultants) as to or in relation to, the accuracy or completeness of information on this web site.

The information provided herein is current as of January 1, 2022. Team information may change from time to time.

Advisory services for alternative investments and equity strategies is available through Strategic Capital Fund Advisors, LLC (“SCFA”), an exempt reporting advisor. SCFA’s strategies are designed only for individuals or firms who qualify as “Accredited Investors” under Regulation D of the Securities Act of 1933, as amended.

The information herein is a general communication which is not impartial and has been prepared solely for information and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The material contained herein has not been based on a consideration of any individual client circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

Alternative investments are speculative and include a high degree of risk. Past performance is not necessarily indicative nor a guarantee of future results.

Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for long-term investors willing to forego liquidity and put capital at risk for an indefinite period of time. Alternative investments are typically highly illiquid – there is no secondary market for private funds, and there may be restrictions on redemptions or assigning or otherwise transferring investments into private funds. Alternative investment funds often engage in leverage and other speculative practices that may increase volatility and risk of loss. Alternative investments typically have higher fees and expenses than other investment vehicles, and such fees and expenses will lower returns achieved by investors.

Alternative investment funds are often unregulated, are not subject to the same regulatory requirements as mutual funds, and are not required to provide periodic pricing or valuation information to investors. The investment strategies described in the following pages may not be suitable for your specific circumstances; accordingly, you should consult your own tax, legal or other advisors, at both the outset of any transaction and on an ongoing basis, to determine such suitability. No investment should be made without proper consideration of the risks and advice from your tax, accounting, legal or other advisors as you deem appropriate.

No representation or warranty, express or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by TSF or SCFA (or any of their respective directors, officers, employees, advisers, agents, representatives and consultants) as to or in relation to, the accuracy or completeness of information on this web site.

The information provided herein is current as of June 1, 2022. Team information may change from time to time.

Crypto and DeFi: The (R)evolution is Afoot

Go to original source: Catalyst Insights by Sune Sorensen

Thank You for your Interest

Go to original source: Catalyst Insights

by Sune Sorensen