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What if you could bake justice and generosity into the processes of Wall Street from its inception?
It might actually be possible to do this in #DeFi.
That might be ignorant and idealistic, but it might be right.
Follow me here.
It might actually be possible to do this in #DeFi.
That might be ignorant and idealistic, but it might be right.
Follow me here.
In traditional finance, indexes and ETFs are baskets of pre-selected securities—a single asset representing many other assets. ETFs trade on the market just like regular stocks, while indexes trade outside it. For simplicity’s sake, I’m calling both indexes here.
Indexes are highly useful because they’re selected by experts and, depending on the methodology, their performance has a direct correlation with the overall performance of the market or a specific segment of it.
While banking on an individual stock to perform consistently from year to year is impossible, indexes smooth that volatility out, allowing holders to buy the long-term growth and performance of a sector without getting bogged down by details like over-analyzing Elon Musk tweets.
Indexes are useful for investors who don’t have time to weigh the millions of options available to them and just want to trust experts. (Warren Buffett is a huge proponent of indexes for average investors & even wants 90% of the money left to his widow converted to the S&P 500.)
But here’s the thing: indexes represent real stocks. Real stocks, by the way, have voting rights.
Ok, let’s talk DeFi. Forget #Bitcoin 
. #DeFi—decentralized finance—is the big money story in 2021. I believe that DeFi was already getting ready to break into the mainstream this year, but the entire WallStreetBets / Robinhood debacle provides the narrative watershed moment.
. #DeFi—decentralized finance—is the big money story in 2021. I believe that DeFi was already getting ready to break into the mainstream this year, but the entire WallStreetBets / Robinhood debacle provides the narrative watershed moment.
In the DeFi world, crypto devs—many of whom operate in anonymous coops—are creating the future of financial systems one building block at a time. Lending, borrowing, saving, insuring, trading, investing—it’s all built.
The numbers are undeniable. The surge of growth and attention on crypto has brought enormous amounts of money into the DeFi ecosystem.
Back to indexes. There are two major index players in the DeFi space: @indexcoop and @PieDAO_DeFi. (A “DAO” is a distributed autonomous organization.)
Both Index and PieDAO have cooperative models and allow for any token holder to vote in their processes using their governance tokens: $INDEX and $DOUGH. (Disclosure: I hold a very tiny amount of both.)
Because of the way things are organized, it’s staggering how much power these index governance tokens could have in DeFi compared to how low their prices are—about $2 for $DOUGH and $30 for $INDEX.
One $DPI token represents $420 in governance tokens for the top DeFi projects. In contrast, $INDEX, the governance token overseeing $DPI and *other future indexes*, is currently $27.
These indexes already play a role shaping the development of DeFi. Check out the list of criteria to be considered an asset included in $DPI, including things like user safety. I have no doubt these criteria have an impact on project priorities. https://www.indexcoop.com/dpi
Especially when considering the early state and impending growth of the DeFi space and the fact that the average investor never exercises their voting rights, a large and coordinated purchase of such governance tokens would hold enormous sway.
I would love to see a meta-meta-governance token—a token set of high-leverage governance tokens, combined with a coordinated effort to organize around a set of principles that could ultimately help shape the values of DeFi.
This intersects with other thinking I have been doing which is that there is so much money being thrown around—and that’s just a fraction of what will be—it seems nonprofits and NGOs ought to get involved in crypto-based fundraising ASAP. (No doubt some are.)
I could see a model where part of the expectation held by index listing criteria would be that a tiny slice of each transaction goes toward some non-profit or commons-investing DAO. Perhaps you could even choose where that slice goes when you configure a trade.
Toxic masculinity and white supremacy are major problems in traditional finance. They are absolutely a presence in DeFi, too, which makes it an unwelcoming and unsafe environment for many people. Indexes could require community code of conducts and community safety commitments.
We could build investment in the commons *beyond* finance into DeFi and we could have a mechanism for holding subcultures accountable. Ultimately I think this aligns with the anarchist and cooperative concepts which are already built into the structural DNA of the DeFi ecosystem.
I’m naïve, ignorant, and idealistic. I’ve believed these kinds of things about the web before, but the power of the status quo always seems to follow the money, eventually. Maybe this time we can do things differently.
Does anyone else find this interesting? What do I have wrong here? What are your thoughts?
@caseorganic @marazepeda @julien51 @joonian @eads @jenniferbrandel @operaqueenie @ajscholz @ntnsndr @jbenet @juanbenet @daviddias @solarpunk_girl @pet3pan_ I’m very curious of your thoughts on this ^ thread. To me, this feels like it could be a good use of a @Zebras_Unite token.
Whoops @pet3rpan_ ^ typo’d your handle :)
