Under-collateralized Loans and DAOs: ETHcc Reflections from GoodDollar’s Tomer Bariach

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Last week Tomer Bariach, the Foundation’s Product Lead and Head of Token Economics, took GoodDollar’s message to ETHcc, Europe’s largest Ethereum conference. The event, which took place in Paris from July 20-22nd, also gave him a chance to check in on the wider state of play in decentralized finance (DeFi).  

Here are Tomer’s top insights and takeaways from the conference.

What DeFi trend was most exciting during the event?

Aave founder and chief executive Stani Kulechov opened the conference by talking about Aave’s new feature that supports under-collateralized loans. This seems to be what the community was waiting for. If and when that happens, it will mark the point where the crypto economy transitions to the real economy. 

Under-collateralized loans are used by ordinary people to upgrade their living standards (e.g. to pay school fees, buy a property, or start a business). If the blockchain world can find a way to provide loans like these that are competitive with the traditional financial market, it will break the wall between crypto and the real world. 

One of GoodDdollar’s goals is to offer users a system of sovereign identity on the blockchain. There are already 220,000 unique users who have used our system to set up a GoodDollar wallet. We believe sovereign identity will be a crucial step on the path to providing under-collateralized loans on the blockchain.

What was the prevailing view on the future of NFTs?

Non-fungible tokens (NFTs) were a hot topic, but the focus was less about use cases in art than applications for gaming. I believe this is the true usage of this technology. The number of interesting initiatives going in that direction is amazing. 

Unlike art NFTs–which can be very elitist–the concept of collecting tokenized items in a game is accessible to everyone. These NFTs belong to the people, and in particular to the young generation. Play-to-earn is becoming a real thing. Take a look at games like Axie Infinity.

There is growing talk about how decentralization is changing how blockchain projects are governed. Was there much talk about organizational structure at ETHcc?

Decentralized Autonomous Organizations, or DAOs, are no longer just a story. Everyone is a part of a DAO: investment DAOs, development DAOs, protocol DAOs. After attending ETHcc, I had to ask myself, “Is anyone still working at a company?”

Everyone is talking about how much faster it is to onboard into a DAO compared to onboarding into a traditional company. I do believe that one day, it will be as normal to say “I work for a DAO” as “I work for a company.” It will simply become another form of association that fulfills certain organizational needs.

How is the legal and regulatory community greeting the growing popularity of DAOs? 

Regulators will take a while to catch up. Thankfully, crypto’s legal community seems to have reached a whole new level. Never have I attended a conference with so many lawyers who had such a deep understanding of the crypto space.  

This levelling up of the legal community in crypto is accelerating to keep pace with innovation in the field. The fact that there are live products out there that meet the standard of decentralization means the legal community no longer has to just imagine what DeFi could look like. It can see real live use cases in action. The people who actually care about the vision can learn simply by using these products.

I’ve always said that the best crypto industry lawyers are product managers. The decisions they make are just as critical to the success of protocols as those made by leading product managers. After visiting ETHcc, I can say that many lawyers have reached that level. 

Was there much representation from the Universal Basic Income (UBI) community?

Very much so. Many people around the world are excited about UBI and want to start testing it. Blockchain is the natural space for that kind of experimentation. There are some good people driving innovation in UBI.

I was really happy to meet Worldcoin, Proof of Humanity, and Celo, and to find that each of them sees crypto UBI as a collaborative effort, not a competition.

It also seems like each of these UBI protocols has focused on a different aspect of the problem: Proof of Humanity has built a decentralized identity solution, while Worldcoin has created a new infrastructure for identity recognition. GoodDollar has focused on the token economics side of the equation. 

Happily, each of these is built in an interoperable way, so there should be plenty of opportunities for us to work together when the time comes. 

You can watch Tomer’s full talk here.

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