Ethereum
@ethereum
0/ Ethereum is for financial market infrastructure: a guest thread by @malekanoms
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Ethereum
@ethereum
1/ I recently co-authored a paper with ECB Director General Ulrich Bindseil, exploring how a network like Ethereum has features that represent a leap forward in financial infrastructure and enables financial products that can’t exist on TradFi rails
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Ethereum
@ethereum
2/ The features in question are streaming payments, omni-asset settlement, programmability, and disintermediation
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Ethereum
@ethereum
3/ On payments: a big part of the appeal of stablecoins is their unusual cost structure. Unlike TradFi payment rails, crypto networks don’t have a business model per se, only a security model. So while legacy rails look to raise fees, crypto will reduce them
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Ethereum
@ethereum
4/ The likely end- state is one where crypto payments become effectively free, enabling streaming money, and raising interesting questions like “how often should bonds pay interest?”
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Ethereum
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5/ Next, most TradFi settlement systems are single asset, meaning they manage ownership of just one thing. US dollars exist in one such infrastructure, Euros in another, stocks in a third, etc. Economic activity that involves multiple assets is full of friction and risk
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Ethereum
@ethereum
6/ Tokenization makes Ethereum omni-asset, with smart contracts enforcing atomic swaps. Moving vital activity–like FX trading or derivative settlement–onchain will thus make the global financial system cheaper, more innovative, and a lot safer
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Ethereum
@ethereum
7/ Today, most financial products are already automated, but in narrow ways. Programmability via smart contracts takes things to another level, thanks to the expressivity of a Turing complete language
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Ethereum
@ethereum
8/ Perhaps more importantly, smart contracts are resilient and trustless. Automation is not very useful if the underlying platform can censor, or go down. Here, Ethereum is exceptional, even by blockchain standards. Blockchains should never go down
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