As an ex big 4 auditor I can attest that the centralized crypto market (Cefi) is broken.
Contagion is about to go parabolic, here's why this is a bull case for decentralization.
Here's what needs to change.๐๐งต(1/10)
Contagion is about to go parabolic, here's why this is a bull case for decentralization.
Here's what needs to change.๐๐งต(1/10)
Each individual exchange maintains their own ledger.
- The assets are overinflated.
- The liabilities are understated.
They do not match externally to their counterparties, particularly once one of the entities in the system goes bankrupt.
- The assets are overinflated.
- The liabilities are understated.
They do not match externally to their counterparties, particularly once one of the entities in the system goes bankrupt.
The valuation of assets and liabilities across borders is inconsistent.
They use different accounting treatment that requires adjustments & expertise that many of these failed crypto entities appeared to lack.
Local GAAP, IFRS etc. "MANUAL" adjustments are posted to align them.
They use different accounting treatment that requires adjustments & expertise that many of these failed crypto entities appeared to lack.
Local GAAP, IFRS etc. "MANUAL" adjustments are posted to align them.
The control frameworks and systems are not fit for purpose.
There are accidental transactions, in the millions, being sent to incorrect addresses.
Fat fingered mistakes on steroids.
There are accidental transactions, in the millions, being sent to incorrect addresses.
Fat fingered mistakes on steroids.
There is a severe lack of disclosure around related parties and associated txs.
Why is this important?
It highlights favorable arrangements or may require consolidation adjustments to remove double counting.
Overvalued FTT & SRM on Alameda's balance sheet...?!
Why is this important?
It highlights favorable arrangements or may require consolidation adjustments to remove double counting.
Overvalued FTT & SRM on Alameda's balance sheet...?!
The solution: Proof of solvency.
Proof of reserves: All wallets and transactions verified on chain.
Proof of liabilities: A complete list of 'material' creditors periodically matched to counterparties (debtors).
The alternative: Decentralization. No unreliable intermediaries
Proof of reserves: All wallets and transactions verified on chain.
Proof of liabilities: A complete list of 'material' creditors periodically matched to counterparties (debtors).
The alternative: Decentralization. No unreliable intermediaries
Remove the manual intermediaries.
The human error or deliberate misuse of funds is causing these catastrophic issues.
- Using customer deposits for high risk strategies.
- Over inflating native tokens values for leverage collateral.
None of this is due to the tech.
The human error or deliberate misuse of funds is causing these catastrophic issues.
- Using customer deposits for high risk strategies.
- Over inflating native tokens values for leverage collateral.
None of this is due to the tech.
Many companies push for automated systems.
They are fully aware that most of the financial statement errors or misappropriation is from humans. MANUAL.
So remove the human element. Preventative controls.
Blockchain is as transparent and automated as it gets.
They are fully aware that most of the financial statement errors or misappropriation is from humans. MANUAL.
So remove the human element. Preventative controls.
Blockchain is as transparent and automated as it gets.
The main reason most CEX are used is for:
- On/off ramps to fiat
- Favorable tx fees versus bridging
- More familiar with how to use
- Perhaps better liquidity in some instances
But:
Education is happening.
UX is improving.
CBDCs will reduce the need.
- On/off ramps to fiat
- Favorable tx fees versus bridging
- More familiar with how to use
- Perhaps better liquidity in some instances
But:
Education is happening.
UX is improving.
CBDCs will reduce the need.
It's far from perfect now, but it needs to be better.
Decentralization is not the problem, human nature is.
Minimize that, through maximizing the use of blockchain tech and the sector will be in a far better position.
If one person writes an improvement idea from their UX...๐
Decentralization is not the problem, human nature is.
Minimize that, through maximizing the use of blockchain tech and the sector will be in a far better position.
If one person writes an improvement idea from their UX...๐
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