The Owl Explains Hootenanny

Teana Baker-Taylor (Circle) and Ari Redbord (TRM Labs)  delve into the intricate world of crypto regulation, anti-money laundering, and blockchain's transformative potential. They discuss how decentralized finance challenges traditional frameworks, the evolving landscape of policy-making, and the impact of tokenization on established financial systems. Explore the societal and financial shifts instigated by groundbreaking blockchain technology and recent policy developments.Find out more in our explainers at owlexplains.com  

This episode discusses the costs of liquidity provision at Decentralized Exchanges. Ciamac Moallemi (Columbia University) explains that liquidity providers at a Decentralized Exchange always face a loss relative to an asset portfolio that actively rebalances to match the asset weighting of the Decentralized Exchange at all times. This loss, known as Loss-Versus-Rebalancing (LVR, pronounced 'Lever'), is the primary cost of liquidity provision. Design refinements to mitigate this cost are discussed.Paper: Automated Market Making and Loss-Versus-Rebalancing

This episode discusses lending platforms on blockchains. Thomas Rivera (McGill University) and Quentin Vandeweyer (University of Chicago) explain that lending platforms generate sub-optimal welfare due to under-utilization of funds that are lent to the platform. To provide more context, lending platforms are specified in such a way that the level of borrowing (relative to lending) necessarily fluctuates with market conditions, resulting in instances where borrowing is significantly below lending. Importantly, when borrowing is significantly below lending, the total interest accrued from borrowers (relative to lending volume) is necessarily low, yielding low interest rates for lenders and thereby discouraging lending. Potential improvements for lending platforms are discussed.Paper: Equilibrium in a DeFi Lending Market

This episode discusses a phenomenon known as Just-In-Time Liquidity at Decentralized Exchanges. Agostino Capponi (Columbia University) explains that, while this phenomenon is generally viewed as positive for liquidity demanders, it can actually undermine liquidity provision. More specifically, JIT liquidity providers can pick-and-choose the best trades, which reduces the incentive for passive liquidity providers to offer liquidity. The consequent reduction in passive liquidity can lead to lower overall liquidity.Paper: The Paradox Of Just-In-Time Liquidity In Decentralized Exchanges: More Can Sometimes Mean Less

Brett Falk (University of Pennsylvania) and Gerry Tsoukalas (Boston University) discuss voting protocols in Decentralized Autonomous Organizations. Brett Falk (University of Pennsylvania) and Gerry Tsoukalas (Boston University) highlight weaknesses in existing voting protocols. An important point is that many voting protocols weight votes based on token holdings but a voter’s token holdings does not, in general, reflect the level of information that the voter has with regard to a voting proposal. The consequence of this misalignment between a voter’s weight and a voter’s information is suboptimal welfare outcomes.Papers: Token-Weighted Crowdsourcing and Balancing Power in Decentralized Governance

Lewis Cohen (DLx Law) discusses whether cryptoassets are securities from the perspective of US law. Lewis Cohen (DLx Law) explains the relevant US securities laws and then highlights how cryptoassets can differ from traditional securities. A key point is that many cryptoassets do not confer rights in the manner of traditional securities, instead conferring abilities. Cryptoassets thus might require a novel regulatory framework.Paper: The Ineluctable Modality of Securities Law

Maria Bustillos, journalist, editor, and founder of Popula and the Brickhouse Cooperative, delves into the complexities of managing misinformation, illegal, and harmful content online. Join us in a timely discussion on the challenges of content moderation and freedom of speech in today's internet landscape.Find out more in our explainers at owlexplains.com 

John Neufeld, General Counsel at Open Zeppelin and Charter Member at TechGC, joins Sylvia Sanchez for an in-depth discussion on the enhanced security features of blockchain technology compared to traditional databases in our latest Owl Explains podcast. We delve into why security is crucial in blockchain development, and how cutting-edge technologies like AI and machine learning are being integrated to fortify blockchain security.How Should We Regulate Crypto/Web3 Cybersecurity? 

Owl Explains anuncia su iniciativa en Español, siendo un proyecto comprometido con el pensamiento global para el desarrollo responsable de la tecnología blockchain. Sylvia Sánchez project manager de Owl Explains, y Leandro Davo, abogado, consultor para emprendedores y empresas, especialista en propiedad intelectual e investigador de blockchain desde 2018, nos presentan el 'Árbol de la Sabiduría'. Este modelo de cinco ramas guía la regulación de la blockchain y Web3. Comenzamos con una base sólida sobre blockchain, desmitificando conceptos clave. Luego, exploramos la tokenización, sus usos y diferentes tipos de tokens. Profundizamos en el ambiente regulatorio de esta industria y concluimos con temas relevantes en el campo.

Anne-Sophie Gógl (Digital Euro Association) and Peter Kerstens (European Commission) shed light on the digital euro's potential form and the crucial role of various stakeholders in making it a reality. We discuss the European Commission’s proposal and the ECB’s upcoming decision to potentially move from investigation to realization of this ambitious project. Amidst debates over privacy, security, and the impact on cash, we delve into the EU’s vision of a digital currency embodying its core values.Find out more in our explainers at owlexplains.com