Highlights From “DeFi Is Good” — VegaX Digital Asset Education Series
This edition of the VegaX Holdings Digital Asset Education Series in Partnership with Chinaccelerator features Mark Yusko (Again!), CEO of Morgan Creek Capital Management and Managing Partner of Morgan Creek Digital Assets — helping institutional clients gain diversified exposure to the emerging digital asset class.
You can revisit and replay the recording of the webinar series by clicking on the link below.
For a summary of the webinar discussion and the top 3 quotes from Mark Yusko in bold, keep reading!
As always, please reach out to us with questions, comments, and suggestions for topics/speakers for our Digital Asset Education series!
About Mark Yusko, Founder, CEO, and CIO of Morgan Creek Capital Management and Managing Partner of Morgan Creek Digital Assets — a leading digital asset manager for institutions around the world.
Mark founded Morgan Creek in 2004 and currently manages more than $2 billion in assets. Prior to founding Morgan Creek Mark was CIO and Founder of UNC Management Company, the endowment investment office for the University of North Carolina at Chapel Hill. His goal originally was to be an architect and when he decided he didn’t like it, he decided to try being a doctor but couldn’t come up with a good reason for why he wanted to pursue becoming a doctor. Through a series of happenstances, he ended up in investing.
Last time you were on we talked about your path down the crypto rabbit hole and we talked about Bitcoin and decentralized currency as the next societal movement and a change in the way we interact with each other. Even since then, we’ve seen exponential growth particularly in the DeFi sector. We didn’t discuss that the last time, but we are ready to do it now.
Can you talk about what you are seeing in the space and how investors are reacting to decentralized finance (DeFi)?
“It’s such an important topic and we could spend all day talking about it. DeFi really has exploded in importance but also in the volume of opportunities, the amount of capital that has flowed into the space, and the amount of talent. The talent migration into the digital space is like nothing I have ever seen. I thought the migration in the 90’s into the internet was big, but this is bigger.
I came out of the traditional finance world, so if we go way back, China was the first to institute paper money, and then over time we had a ledger system, but you had to trust the other person in the lending transaction. Now there is an opportunity to transition from human beings managing ledger systems to code. DeFi is taking us into a world where we don’t have to trust that a banker has our interest at heart. We know the banker has their interest at heart, and we know that we can take control of our wealth with things like Bitcoin. Technology is now allowing us freedom from the traditional finance system.”
There’s a lot of discussion around the protocols, which causes a schism in the blockchain industry but outside it’s even more confusing. Like why can’t you do DeFi on Bitcoin right now and why do you need to use Ethereum and what about all these new things that are coming up etc. What are your perspectives on this? Do we have a coexisting network in the future?
“The maximalism is pretty amazing, but we live in a fiat world where paper currency is simply a belief system. There are people that say Bitcoin is the only thing we should talk about, but Bitcoin has a role in a portfolio as digital gold. We have this tribalism between the Bitcoiners and the Ethereum people, but Bitcoin and Ethereum aren’t trying to do the same thing. I can absolutely see a world where they both exist. The whole ‘it can only be Bitcoin’ or ‘it can only be Ethereum’ talk is just a waste of time.”
This is the first time we’ve seen the financial markets evolve at a much faster pace than safety can and adoption as well. You know there was the Poly hack, where the guy ended up returning the money. What are your thoughts on all of that?
“It’s the nature of most innovation that it tends to be funded by deeper pockets and we socialize that through the venture capital industry. The issue here is development in the crypto space started at the retail level and unfortunately there were not only no guardrails but no rules of engagement. I do think there’s some need for regulation, but on the other hand I don’t believe that because the accredited investor standard makes my skin crawl. Why does the amount of money you earn determine whether you should be able to invest in something or not? That doesn’t make any sense.”
What are your thoughts on recent regulatory developments?
“I absolutely believe that we need to have good regulation, and generally the SEC has done a good job. However, the recent bill in Congress was not so great, and the reason it happened is the incumbents are starting to get afraid of the disruptors, as they should be. But we need to decide as a society that we are going to have basic protections in DeFi so that people don’t abuse the system.
Centralized platforms like Coinbase and BlockFi are the way we are going to get to the next billion users, people who want to be involved but don’t want to have to manage their keys etc. However, over time as the digital natives continue to have a presence in this space, decentralized platforms will be adopted at a greater level. DeFi is going to be the dominant financial services system in the world, because code works. Lots of things are going to drive adoption. Digital is better than electronic, decentralized systems are better than centralized systems. They are more fault resistant, they are more secure, they are more scaleable, they are borderless, they are 24/7. The stock market is closed more hours than it’s open, and why are American hours the right hours? That’s insane.
I think as we move into this decentralized world, there are bugs that need to be worked out, we need adoption. However, DeFi is here to stay.”
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As always, please reach out to us with questions, comments, and suggestions for topics/speakers for our Digital Asset Education series! email@example.com
Morgan Creek Capital Management is an SEC registered investment advisor providing investment management services to institutional and qualifying clients such as endowments, pension plans, foundations, and family offices. Morgan Creek provides customized investment solutions to clients in need of a targeted investment program.
Morgan Creek Digital Assets invests in next-generation decentralized and open-sourced asset networks such as Cryptocurrencies, Decentralized Finance, Non-Fungible Tokens, and other liquid networks.
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