Crypto markets are far off from their all-time highs, and today another crypto firm announced a bankruptcy filing due to FTX collateral damage. 2022 is not so much a crypto-winter but perhaps a crypto-ice age. The failure of FTX has harmed the entire crypto sector, yet blockchain or distributed ledger technology still inspires interest and innovation. In the past week, Apollo revealed it was working with Figure/Provenance to power a fund using their tech stack, looking for blockchain to reduce inertia and cost from the process.
One area that will not be fruitful, at least according to Dr. Martin Hiesboeck, Head of Blockchain and Crypto Research at Uphold – a multi-asset digital money platform, is DeFi. Hiesboeck describes a flight to DeFi – as a solution for the CeFi problems as “wishful thinking.”
“An attack on the Curve protocol didn’t yield the hack much profit but was talked about much in the specialist press and on crypto Twitter. The intricacies of the hack aside, the hack underlines our belief that the flight to DeFi is wishful thinking. A) DeFi will only become acceptable if it is 100x securer than it is now, and B) There will be little room for hidden money in the blockchain economy, and that means sooner or later, properly identified addresses will be the only way to operate. You can’t have billions sloshing around in absolute anonymity. What’s more: you don’t want to.”
At the same time, Hiesboeck believes that blockchain must “specialise to demonstrate value.”
“Wave BL, the pioneer of blockchain in the shipping industry, reported over 100k bills of lading processed on-chain so far this year. While this pilot doesn’t involve public chains like XDC, one of Uphold users’ favorite assets, it shows once more that this is primarily a technological revolution that affects many industries. We expect that paths of many current blockchain projects to diverge as they specialized. At the moment, every chain seems to be compelled to excel at everything; a little DeFi, a set of cute NFTs, and ‘application’ in every industry. This will change. Projects will focus on distinct areas, like supply chain, like shipping, like banking, and it is then their true value shall become apparent.”
While streamlining the global shipping procedures may not be sexy, it does create value for the firms leveraging blockchain. Like Figure’s online lending platform or Provenance powering funds, removing cost and speeding up services at scale holds a lot of value. The same may be said for regulated stablecoins but for much of the crypto sector, it’s a trader’s paradise when things are going up.