Here at Curvegrid, I enjoy following the many ways blockchain and smart contract technologies are being applied to financial markets. Some projects are addressing inefficiencies in the existing financial system. Others are creating new, blockchain-native platforms, such as decentralized lending. Some platforms offer new opportunities for speculation.
Recently I came across a company that falls into this last category. It had a polished website and offered sophisticated products linked to crypto-assets, but something was off. It was promoting the trading of these products as a competitive game, with big payoffs to the winner. This is not a constructive model for putting one’s money at risk.
As we use blockchain to remove intermediaries and democratize access to sophisticated ways to take financial risk, we are giving individuals more flexibility to express their view on the market, but we may also be forgoing safeguards as well. Not unlike medicines made suddenly available over-the-counter, this shifts the burden of responsibility to the individual to exercise caution, think critically, and educate themselves in the face of increasingly complex choices.
I hope that we eventually add decentralized self-regulatory organizations to this crypto-asset landscape. Such an organization could borrow from the DAO model and serve to facilitate market integrity and best practices among participants, similar to the role of SRO's such as FINRA in the traditional financial system. This vision may still be far off, but there are already projects, such as DeFi Score, that point to a future where investor choice is bolstered by smart oversight, and where the decentralization of markets does not lead to the diffusion of industry responsibility.