An old friend named Casper writes a weekly newsletter that is usually the most powerful thing I read during the week. He studies community and communion, I believe he calls himself, or did, a “non-religious minister”, and he writes about connection, about being human, about how to find purpose and meaning in life.
Today he pulled a quote from an author, that seemed to suggest we ought to pursue activities that enable, or force, us to “give up the illusion of absolute autonomy and recognize that we are related to, even dependent on, others.” Because we live in an age of such powerful individualism where we assume we have this incredible choice and autonomy, and that we are all free of each other.
So that’s what I want to write about but I need to kill two birds with one stone here. I have to script a 25-minute presentation about *something* related to Compound or cryptocurrency or blockchain before Monday morning, and I have to create slides for it too. Right now I have NO idea what I’m going to talk about. So here I’m going to use this time to brainstorm somethings. Lame, I know, but necessary.
I could talk about Compound’s past, present, and/or future. So I could talk about how we executed on the vision of what we’re trying to do, or at least how we’ve executed to date, and lessons learned along the way. I wasn’t deeply involved in the product side so I can’t do that.
But I was deeply involved in the business strategy side, including fundraising. I could talk about fundraising, I could also talk about building a customer base and launching with traction. I could talk about the hedge fund ecosystem in crypto and tying that together with the DeFi protocol movement that is currently focused entirely on software. So I could talk about the challenges bridging the institutional money with DeFi, and how we eventually get real, gigantic hedge funds on board that today move assets mostly OTC, which is not entirely inefficient. And I could talk about how we think Compound complements that, or dis-intermediates that, or really what the world will look like when DeFi gets big. Maybe there always will be a non-electronic market. Maybe institutions simply want to behave like institutions and DeFi is a revolution for the disenfranchised and the geeks.
I could also talk about version 2 of what we’re building and what it will enable, but that’s pretty technically specific to Compound.
I could also talk about something that is only vaguely related to Compound, or not at all, though that doesn’t make much sense. Something about how I envision DeFi playing out more broadly. There I could talk about asset tokenization… privacy, digitization of everything, open access to financial instruments… regulation. That doesn’t sound easy either since I don’t have a really interesting thesis off the top of my head, and I have no idea what the audience is like.
It seems pretty clear I should talk about something involving the hedge fund partners we have at Compound, what they’re interested in achieving, perhaps how important liquidity is to them, and how liquidity is the constraint for the ecosystem – liquidity begets more liquidity. You see this at our launch level, you see it with our growth through our REP whale, you see it in the demand from institutions that can only get satisfied in block size through trusted brokers – because they have a relationship-developed finger to the pulse on where liquidity is and how to get it and find it. Our REP whale actually started to bring in some institutions. But still, the Pantera’s of the world are interested but they need to be able to move $5 million without causing a fuss, and right now you can only do that in the OTC way, where the OTC desks actually take on the liquidity risk but charge a premium for it, and their whole business is build on being able to find liquidity extremely efficiently.
I could also talk about v2 a little bit here as well since I can talk about how the support of more assets creates more lines across asset pairs, which creates more liquidity for every asset theoretically, and how that creates really interesting use cases e.g. DAI with REP and ETH.
Liquidity begets liquidity. Lessons learned from Compound’s launch, growth to date, and vision for the future. And it starts with, what do our users want? Liquidity. By creating an interest mechanism we have a tool to attract liquidity and that begets more. And the more liquidity there is, the more interesting things you can do with it. What if Compound was way cheaper? That would create even *more* liquidity.
Anyways, a great start. Knew this would help 🙂 Goodnight.