Reimagining DeFi—“DeFi for RealFi”
Reimagining DeFi—“DeFi for RealFi”
Boost DeFi with research on open source new financial models
Introduction
Introduction
About Wolfram Blockchain Labs
About Wolfram Blockchain Labs
Wolfram Blockchain Labs is a subsidiary of Wolfram Research exclusively licensed with high-performance Wolfram blockchain technologies and specifically designed to extend ecosystem tools for application development for distributed ledger technologies (DLTs). Wolfram Blockchain Labs provides four distinct areas of ecosystem support for DLTs: computational intelligence for blockchain-based smart contracts, direct access to blockchain data through blockchain integrations, blockchain educational programs and crypto asset analytical tools.
Each of the four projects are interconnected and serve Wolfram Blockchain Labs’s overall long-term mission of ecosystem collaboration, enabling blockchain-based commerce and business model innovation.
Each of the four projects are interconnected and serve Wolfram Blockchain Labs’s overall long-term mission of ecosystem collaboration, enabling blockchain-based commerce and business model innovation.
Wolfram—Cardano Project Catalyst Proposals
Wolfram—Cardano Project Catalyst Proposals
WBL plans to use its position in the Cardano ecosystem—as a builder of tools and business operator —to assist with mentorship and collaboration within the Cardano ecosystem. We can take our experience in both working on opportunities and technical work to help accelerate the vision of members in the Project Catalyst community. At times, people have reached out to us for assistance on Cardano projects, and making sure there is a uniform criteria for outreach will help our ability to assist everyone who is interested.
Reimagining DeFi—“DeFi for RealFi”
Reimagining DeFi—“DeFi for RealFi”
Problem Statement:
Problem Statement:
◼
There is a lack of imagination and systems thinking in utilizing decentralized finance for the real (non-financial) economic, social, environmental, or digital ecosystem.
◼
Arguably, the purpose of finance, which includes insurance, banking, credit and money, is to facilitate exchanging, investing, producing and distributing real goods and services in ways that minimize risk, promotes innovation, creates prosperity, are sustainable for the environment and support human dignity.
◼
A financial system should not be an end unto itself, and yet this is where DeFi imitates CeFi in reinforcing the financialization of our economy—a trend that has garnered immense academic study during the twenty-first century, known as the period of post industrial capitalism. As with financialized capitalism in finance-led economies, speculative value, rather than fundamental value, appears to be DeFi’s raison d’être. While: "speculators may do no harm as bubbles on a steady stream of enterprise ... the position is serious when enterprise becomes the bubble on a whirlpool of speculation . When the capital development of a country becomes a by - product of the activities of a casino, the job is likely to be ill - done ." (John Maynard Keynes 1936)
One way out of this is to reinvigorate DeFi’s imagination with computational thinking and novel conceptual financial designs that take account of interlocking economic systems with externalities for the economy, society and environment.
Proposal
Proposal
The Solution to This Problem:
The Solution to This Problem:
In Reimagining DeFi, we offer a vision for blockchain financial services that can support real-side economic activity. Concepts will focus on the decentralized management of ecosystems using money and accounting systems, elements missing from today’s DeFi, which is focused on liquidity and yield farming. Three areas have been chosen that complement the team’s expertise, experience with startups, utilization of Wolfram computational tools and respective avenues for the greatest social impact:
1
.Special Purpose Currencies for Matching and Clearing
2
.Smart Accounting Systems with Self-Sovereign Data
3
.Universal Basic Income for New Economic Relations
Below are brief descriptions of each concept model, each building upon the last and premised upon money and credit decentralized systems for the purpose of non-financial, real-side outcomes with social impact .
1. Special Purpose Currencies for Matching and Clearing
1. Special Purpose Currencies for Matching and Clearing
By democratizing and localizing finance for specific business systems or community groups, decentralized finance can scale in a distributed manner. Multiple special purpose tokens can be independent of collateral when non-convertible. Rather than liquidity, mutual credit platforms like carbon offset markets, allow individual members to issue their own credits endogenously. As in most financial systems, debits and credits cancel out and the purpose of money or tokens is their use as a medium of exchange. These systems aim to circulate and utilize resources efficiently within a local ecosystem. Such tokens can be used within a community of different stakeholders and designed for specific purposes. Monetary pluralism, where each person has a wallet with multiple currencies, should be facilitated by DeFi practitioners. On-chain and off-chain data collection, transparency and privacy are key for successful testing and tweaking by architects and users. Nonlinearities and feedback effects can be analyzed, visualized and explained with the Wolfram Language, greatly assisting ecosystem management.
2. Smart Accounting Systems with Self-Sovereign Data
2. Smart Accounting Systems with Self-Sovereign Data
Ignoring the idea that money is a commodity that is scarce, excludable and hierarchical, all our models will use its competing definition, that money is credit and its purpose is for clearing and settlement. Since credits are promises or IOUs, there is no such thing as scarcity; instead, there is a notion of reciprocity or accountability—what I give away is owed back to me in exchange at some later date. Money keeps account of who is owed and who owes and how much—it is a network accounting system. Most of us use national money or bank money as their accounting protocol in their ecosystem of production and trade, but special purpose money, blockchain tokens or records can also be a bespoke ecosystem accounting protocol. Accounting need not only be for transactions of goods and resources, but it can also be a record of any event, an action within a firm’s production process. Supply chain accounting can also be recorded, as can votes, or other tallies. Enterprise accounting can be built out into an ecosystem accounting format.
A transparent mapping or accounting system for an entire ecosystem is highly valuable, but openness can also compromise issues of privacy and lead to unfair competition. To protect privacy but still utilize aggregate data for ecosystem management, pricing or rewards, bonding curves or smart computational contracts can be created that keep identities hidden but allow for event execution.
3. Universal Basic Income for New Economic Relations
3. Universal Basic Income for New Economic Relations
Decentralized markets, with private property, work well when they satisfy something called “perfect competition,” a setting where participants are not large enough to set prices themselves, but rather are subject to competitive pricing. This happens when marginal costs in an enterprise or production process are rising over the long run. Monopolies and imperfect competition occur when marginal costs are falling in the production process. Barriers to entry are naturally constructed and growing market share and network effects lock in monopolies, or oligopolies that collude, with no threat of competition. Digital products and services are rife with falling marginal costs that go quickly to zero. These markets are known as “club goods,” or artificially scarce goods and services. Big tech and social media companies are the most familiar but so too are digital financial services. These zero marginal cost digital industries explain why most big tech and social media companies are now becoming fintech companies. Payment platforms, insurance, money and credit are centralizing not only in the CeFi world but with DLT too.
Inequality is stark with one percent of the world’s population owning half the world’s wealth. Maximizing profit in such systems will always mean artificial scarcity, discriminatory pricing and growing inequality. The unbanked exist, not just because of asymmetric information. Monopolies maximize profit through artificial scarcity and endemic discriminatory pricing, which will always mean that some people (most people) won’t be able to afford digital and financial services even though the cost of providing them is zero.
This madness of a hierarchical CeFi or hierarchical DeFi system that is not open is characteristic of the economic structure of our monopoly capitalist system. Systemic change will require new economic relations. One of those identified in David Graeber’s book Bullshit Jobs: A Theory is a universal basic income (UBI). Graeber argues that only in a functional community where everyone has a basic income can people come together to solve their social problems in creative ways.
In a closed-circuit financial system, a sustainable UBI is an engineering or systems problem. It is also a political problem. Finance sits right in the middle of these economic, political and social interests and can’t be separated out as an independent area. We consider this problem, that finance is not independent of real-side issues, emblematic of this entire proposal, where DeFi for RealFi requires a broader imagination.
Key Objectives:
Key Objectives:
Based on these three designs we shall:
◼
Map three conceptual DeFi design diagrams
◼
Convene virtual study groups to get feedback from Cardano community on design configuration
◼
Write three working papers using feedback from study group
◼
Present at conferences or in webinars for professional feedback
◼
Submit papers to peer reviewed journals for publication
◼
Use research in educational materials for blockchain audiences
Execution Phases:
Execution Phases:
12 month timeline for the execution of all items in the plan, these would be completed in the following phases:
◼
Mapping: Month 1-2 (target time: 1-2 months)
◼
Study group: End of Month 2
◼
Working papers: Months 2- 9 (target time: 3 months for each paper)
◼
Conference Presentations: Months 9 - 12
◼
Submit papers to peer reviewed journals for publication: Months 9 - 12 ( 2 month review process for each paper)
◼
Promote research for adoption in educational materials and among blockchain DeFi developers for social impact
Measurements
Measurements
◼
Completion of all proposed items.
◼
The number of attendees.
◼
Journal Impact Factor
◼
Use case pilots or adoptions
Allocation of Budget
Allocation of Budget
◼
Team Costs - 38,000 USD (labor)
◼
Supplies / Technical Expenses - 5,000 USD (hardware, books and other associated costs)
◼
Marketing / Outreach - 2,000 USD (marketing budget to promote events)
◼
Publication / Travel - 5,000 USD (Conference Registration and Publication Costs)
◼
Total Request: 50,000 USD
Experience
Experience
Relevant Experience:
Relevant Experience:
Relevant Publications
Relevant Publications
Ussher, Leanne, Laura Ebert, Georgina M. Gómez, and William O. Ruddick (2021) “Complementary Currencies for Humanitarian Aid” Journal of Risk and Financial Management 14, no. 11: 557. https://doi.org/10.3390/jrfm14110557
Barinaga, Ester, Andreu Honzawa, Juan Ocampo, Paola Raffaelli and Leanne Ussher (2021) “Commons-based monies for an inclusive and resilient future.” Climate Adaptation: Accounts of Resilience, Self-Sufficiency and Systems Change. pp301-321. https://arkbound.com/product/climate-adaptation-accounts-of-resilience-self-sufficiency-and-systems-change/
Community Forums
Community Forums
◼
WBL, through our partners at Wolfram U., have resources to help promote materials among their community.
◼
◼
A number of community forums: https://community.wolfram.com
Affiliated Blockchain Events
Affiliated Blockchain Events
◼
WBL, through our partners at Wolfram U. and Wolfram Research, have significant experience in creating large events like Wolfram Technology Conference and other conferences.
◼
Liveminting Event Commercial (90 seconds)
◼
Liveminting Highlights (90 seconds)
◼
Wolfram & NKN Consensus Conference (9 hours!)
Key People
Key People
In addition to the principal people listed, WBL has additional engineers within its blockchain group and has additional resources within our parent company Wolfram Research.
Jon Woodard - CEO
Jon Woodard - CEO
jwoodard@wolfram.com
Jon Woodard is the CEO at Wolfram Blockchain Labs, where Jon coordinates the decentralized projects that connect the Wolfram Technology ecosystem to different DLT ecosystems. Previously at Wolfram Research Jon worked on projects at the direction of Wolfram Research CEO Stephen Wolfram and prior to that was a member of the team who worked on the monetization strategies and execution for Wolfram|Alpha. Jon has a background in economics and computational neuroscience. He enjoys cycling in his spare time and is a resident of the United States.
Johan Veerman - CTO and Principal Investigator
Johan Veerman - CTO and Principal Investigator
johanv@wolfram.com
Johan Veerman is General Manager at Wolfram Research South America and CTO at Wolfram Blockchain Labs. Previously he has been Science Advisor at the Ministry of Foreign Affairs in Peru and Chief Scientist on two Antarctic expeditions. Johan's background is on physics and business management. He enjoys playing soccer and is a certified cave diver.
Christian Pasquel - VP Connectivity
Christian Pasquel - VP Connectivity
christianp@wolfram.com
Christian Pasquel works as Connectivity Manager at Wolfram Research. He manages a group focusing on connecting the Wolfram Language to external services and technologies and has been an instructor at the Wolfram Summer programs since 2016. Christian has a background in physics and has done and published peer reviewed research related to computational molecular biology. He enjoys coding generative art and recently worked on an interactive art installation commissioned by the Contemporary Arts Museum in Lima, Peru. He is a cat lover and had the main part in an official music video available online.
Leanne Ussher - Economist
Leanne Ussher - Economist
leanneu@wolfram.com
Dr. Leanne Ussher is Blockchain Research Fellow at Wolfram Blockchain Labs. Leanne is an economist that specializes in monetary theory, complementary currencies, and the history of economic thought. She is a Researcher at the Copenhagen Business School, a Center for Civic Engagement Fellow at Bard College, and an Associate Editor of Frontiers Blockchain. Leanne has spent 17 years in academia as a professor in economics and finance. She has peer reviewed publications in agent based modeling, network analysis of local currencies, and international monetary system. Outside of academia Leanne was a Senior Researcher on blockchain ecosystems at Consensys, consultant to the CFA Institute on international monetary reform, and Securities Analyst at the Reserve Bank of Australia. She is an advisor to start up crypto collaborative entrepreneurs like the Economic Space Agency (ECSA), Open Farming , the Hudson Valley Current and the Thrive On Network in the Hudson Valley. In her spare time Leanne likes to bake bread, compost, and nurture a garden for butterflies, bees and humming birds.
Steph Macurdy - Blockchain Analyst
Steph Macurdy - Blockchain Analyst
smacurdy@wolfram.com
Steph Macurdy is a Blockchain Analyst at Wolfram Blockchain Labs and has a background in economics, with a focus on complex systems. He attended the Real World Risk Institute in 2019, lead by Nassim Taleb, and has been investing in the crypto asset space since 2015. He previously worked for Tesla as an energy advisor and Cambridge Associates as an investment analyst. Steph is a youth soccer coach in the Philadelphia area and is interested in permaculture.