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Welcome to Educational Alpha. I'm Bill Kelly, your host, bringing you on the ground conversations with business leaders, educators and industry colleagues from around the globe. Educational Alpha is sponsored by iCapital, the financial technology company with a mission to power the world's alternative investment marketplace. Part innovator, part educator, and part navigator of the alternatives industry, iCapital offers intuitive, scalable digital solutions that have transformed how private market and hedge fund investments are bought and sold. With iCapital, financial advisors, wealth managers and asset managers around the world now have access to everything they need to deliver the return and diversification potential of alternatives to high net worth investors. To learn more, visit icapital.com in this.
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Episode, Bill welcomes Daniel Lebow, an expert in blockchain and decentralized finance, to discuss the evolving world of decentralized Autonomous Organizations, or DAOs.
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Daniel shares insights into his background in.
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Traditional finance and technology, his transition into blockchain research, and his work in the dao space, including co authoring a book on the subject. The discussion covers key aspects of DAOs.
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Their governance structures and real world applications.
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If you're looking to deepen your understanding of DAOs and their role in the future of finance, this episode is a must. Listen.
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Daniel Liebal, welcome to Educational Alpha.
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B
Thank you so much. I've been looking forward to this.
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As have I. And if this was recorded three weeks ago, I would describe you as the best friend I've never met before, but we finally checked that box in Hong Kong. You were kind enough to invite myself and my wife Liz was with me and she's probably more sciency than I am being a physician herself, but we both learned a lot. You were kind enough to give me a copy of your book on DAOs, decentralized autonomous organizations. And it's a topic that I know a little bit about. Enough to be dangerous. And I think this is going to be truly Educational Alpha for me and hopefully for the end listeners too. But before we get there, you've had a very interesting background and I learned when I saw you in Hong Kong, I would describe you as a bit of a nomad in that I think you're living out of a suitcase at the moment.
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I am. The bigger picture is that I spent around the first 15 years of my career in what people in the blockchain were called traditional finance, mostly on the investment banking and technology side. And then about 10 years ago I started a little company to do other things. And then very quickly, this whole topic of blockchains and cryptocurrencies and everything that Relates to that fell into my lap a little bit and I started teaching a class in one of the local universities in Singapore, then started researching as well and have some experience running a crypto focused fund as well. Really got interested or sucked in, I should say, into this topic. And then one of the more recent things that I was busy with together with my co author Sandy oh, was to write that book about daos.
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A
Maybe you insinuated it in your remarks there too, but there are so many people that have come from Tradfi to Defi. I think if you're in your teens, maybe 16, 18 years old, maybe this is all you know. But a lot of people like you that cut their teeth and made a very good living and Tradfi went over to the Defi space and if I ask somebody, well, what was the turning point, they often describe, and I've heard them use this phrase, they go down a rabbit hole and they have to study and think about it because it's not something and certainly with me it doesn't come naturally. It's not like I read the book or see it for the first time. So was there a change moment for you? I know you're an academic pracademic, so maybe it was in your genes.
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B
I think it was in my genes, but perhaps more because I also have a technology background and for a very long time in traditional finance, I was dealing with all the systems that related to trading and public markets and so on. So when the blockchain concept came about, I was quite comfortable with the transaction and what that meant because I had worked with it all my life. So perhaps that was more the entry point for me. And I could then also really appreciate some of the advantages that blockchain technology might bring to us. If you think about the amount of time and work that goes into reconciling different data pots inside of a financial organization, for example, is incredible. And if you have one ledger that basically syncs up and then you have something like a ultimate source of truth, not only in one organization, but perhaps across organizations, that sounded very attractive to me and that's why I eventually went down that radio, as you called it.
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Well, hopefully you can teach me and the listeners a few things in the next 30 minutes or so. Some of your book came to me naturally. I think it was written in a plain English way. I think it's maybe that I'm just a little bit dense on the subject, but maybe if we just start out with a couple of definitions, not the least of which is what is A dao.
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B
There are different definitions flying around, different papers and people who have done pioneer work in that space. But I would say it's simply an organization that exists online where like minded people get together to pursue a common objective that is all facilitated through a governance process where people can, on the one side, propose things that the organization should do and then other voting members can cast their votes and decide. All of that is facilitated by a smart contract on top of a smart contract platform such as Ethereum or others.
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Ultimately, if it's gotten people's interest and attention, I assume it's gotta be profit seeking, profit making, if it's successful.
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B
There are many different objectives that these groups of people can pursue, and some of them might be nonprofit and some of them might be investment daos where people try to pick investments and then deploy the shared capital that they've amassed into these investment opportunities. So it's really very much dependent on what the mission or the goal of that organization actually is.
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Maybe to use a simple example, we talked about this in the virtual green room before we went on this Constitution dao, which is a pretty simple concept and I can explain it and you can correct it or expand on it. It was an LLC set up in Wyoming and this group of people that got together and said, wouldn't it be great if we could buy the last copy of the US Constitution in a private holder's hands? And they raised $40 million and the goal would have been to buy the Constitution, hold it and maybe sell it for 70 or 80. They didn't win the bid, so the rest is history. And I said, well, that I can get my head wrapped around because it does have a bit of a profit motive. Any one of those individuals either didn't have 40 million on their own or didn't want to have that concentration of a bet or an asset in their portfolio. So collectively they pulled their resources. I don't think there was a utility token involved. Maybe there was, but if we play this out and they did win the bid, and I think we'll get to this too, one of these concepts of a DAO is no centralized governance at all. There's no governance, it's controlled by the individual token holders. But somebody in that group of buyers of the Constitution has to know a little bit about the value and what they're willing to pay for it and when they're willing to sell it. So theoretically, if I understand a dao, that no one person can maybe put their influence over anybody else. But I guess if I'm holding more tokens than you, I have more votes, but somebody's got to decide if they did buy it for 40 and it goes up to 80, and if the primary token holder wants to sell but the others don't because they think it's going to go to 100, who wins that?
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B
There's a lot in what you just said there. Let me start by kind of explaining how this process would typically work after a DAO is formed. And then there's perhaps some common objective. Somebody would actually have to make a proposal and say, okay, we now want to buy this last copy of the Constitution and I propose we buy it for X amount. So that would be the first step. So you have this role of a proposer. And then of course, all of those folks who are also part of the DAO organization and they become part by holding one or more of these voting rights that come in the form of governance tokens, they can vote. Usually there are rules around this process and when a vote is valid and quorum and minimum participation and all of those things, and then you have a yay or nay vote and you have an outcome. So in this case, maybe the organization said, yes, we want to purchase this copy of the Constitution. And similarly, if somebody was to propose to sell it at a certain price, they could use the same path and they could say, okay, I'm going to propose now that we sell it because we've achieved some sort of financial objective perhaps, and then they could sell it. Oftentimes I don't say always because there are these investment daos as well. But oftentimes the objectives of decentralized autonomous organizations are a little bit more grand than just buying an asset and selling it again. We're very happy to have the afterword in our book been written by a gentleman called Sunny Liu, who started Vechain, but also started what is now known as vbetadao. And vbetadao is basically a very sustainability focused DAO that encourages folks to pick up trash on the street, drink coffee out of a reusable mug, and so on. So there's a whole economic system that basically evolves around incentivizing good and sustainable behavior. And that is very different to purchasing something and then selling it as a profit. And then the motives behind it might also be quite different. So as I said earlier, I think it really depends on the category of DAO as to what the objective is.
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Here in the example you just brought up about sustainability. So if I use a renewable mug or I don't litter, who's providing that reward for me. Who's paying for that reward?
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I'm not the V. Better DAO expert, of course, but the reward comes out of a pool that a particular type of user in the B. BetterDAO ecosystem would sponsor. There's a regular voting process on which process should get a certain allocation, and then that is what basically funds these activities. And then the minute this related token is tradable, it becomes really quite interesting because it is basically a price discovery mechanism for good behavior, if you put it that way.
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A
And then who makes a market in that token? Is it made by the DAO itself?
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I'm not very sure how that exactly works.
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A
How many daos exist in the world today? Do you have any idea?
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B
It's probably in the thousands. Like with everything else in crypto, this moves very, very quickly. And then you also have quite a skewed distribution in the end, because many things are started as experiments and then they disappear really quickly. So if you think about the ones that are active and actually have a little bit of capital to maneuver, it's probably more hundreds, I would think. If you think about the ones that have more than a billion dollars, perhaps it's less than 100 or around 100. So it depends how you want to slice and dice that.
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There's no place I can go to look them up in terms of daos.
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There are websites that you can consult. I won't do any marketing for any of the platforms, but if you Google Dao, actually it should come up.
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Any idea of the market cap? Again, that's probably a little bit of a fuzzy number. And you alluded to the fact that the numbers. It's probably like a unicorn in venture capital. There aren't many over a billion.
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It's very interesting. The market cap of some of these daos heavily depends on the price that their own token is traded at on the public markets. That is, in my mind, one of the things that I would love to research a little bit more in the future. I've started to look at it a little bit. If your treasury, as it were, is composed of 99% of your own token, and then we all know that volatility in cryptocurrencies is very high, if suddenly that price changes by 40%, what is the real market cap of that $3 billion DAO? If it can lose a billion overnight? I'm not sure how to think about that yet. But I would advocate that any DAO founder or any group of folks who take decisions in daos should also consider how to make their concept a little bit more sustainable or more resilient to adverse events that can happen anytime, especially in crypto markets. So perhaps holding a little bit more diversified portfolio here and having some stable coins, perhaps some other cryptocurrencies now even some tokenized real world assets might be a good idea.
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A
And I think you mentioned somewhere in the book about the security of blockchain and it might have been the dao. I don't know if it was first dao.
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Yeah, it was called the ddao, it.
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Had a leaky back door and the whole treasury function was pretty much sucked right out the window in the COVID of night.
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Since then lot has happened. Many of the cryptocurrency projects will hire so called smart contract auditors that are basically IT specialists, some people would call them hackers perhaps that can look through the contract and look out for all of these security vulnerabilities to lower the chances that any of these hacking events might happen.
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Moving on to some of the other risks and opportunities as well. And something that struck me, maybe I saw it someplace else, maybe in the book. Daniel, I forget, but if I think about, to use tradfi vernacular, you talk about accredited investors as an example in a dao, I don't have qualified investors. Anybody can get in to a large degree. And I don't know, maybe I only know this my fellow shareholder, if that's the right term to use through a discord or someplace else where we're in a chat room and maybe they are corrupt, maybe they have a criminal record, maybe they have devious intentions. But there seems to be a coalescence around a common theme where they're coming together not as the very best governance model, because governance doesn't really matter I think inside of a dao. So in terms of know your client, know your colleague, that doesn't really come home to roost it all in a dao.
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I think you already mentioned twice that governance doesn't exist in a dao. I think I will push back against that a little bit because there is a governance process that basically helps the community in the DAO to take decisions. And that is also happens to be the title of an article that I'm going to put out real soon that describes that a little bit better. But what you're trying to describe is what we call in the book DAO accountability risk. And that is an idiosyncratic risk that is not very well documented elsewhere as far as I know at least. And it's basically the risk of not being able to clearly identify a representative that is responsible for DAO or the member's actions. We defined it in that precise way after also discussing a little bit with our legal friends how important it is whether a very small token holder that effectively cannot influence the decisions of a dao, whether it matters that they are a rogue actor, for example, the feedback from the legal professionals is basically it doesn't. But the minute they have meaningful control or meaningful voting power, that all changes. So there is this risk that effectively we don't really know who we're dealing with. There are various ways in how to address this. But if you would think about the single most biggest concern that any financial institution has today in servicing a dao, then it's that modern finance is built on top of understanding who you're dealing with. So that is one of the challenges that exist. Absolutely.
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If I think about almost any business in tradfi, and again, maybe I'm a victim or a prisoner of that because that's all I've known. But in investment management you have the star portfolio manager. In Apple you have Steve Jobs and the people that succeeded him, and Bill Gates and Microsoft, you don't have this star system or I don't see how you possibly could unless the star was the primary token holder.
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Perhaps it goes back to really human preference. We like to be comfortable with some person that we can idolize a little bit. And I don't think that the world of daos and cryptocurrencies is exactly free of that. You have these thought leaders, divas, I don't know what to call them, or something in between that that are very well respected and that perhaps sometimes also decide whether somebody wants to be part of a DAO or not, because they like the mission and they like how they go about it and so on. Remember that in a dao the disclosure of your identity is optional. So it doesn't mean that nobody does it. If you choose to disclose who you are, you can. If you're a well known VC investor on the Ethereum blockchain, you add a label with your investment firm's name to your wallet through that ENS service, which is very easily done. You can say that you are Andreessen Horowitz or Sequoia or whoever you are, you can disclose that. And there's also emerging research around signaling and what that means for attracting additional capital and so on. But what you're saying really goes down to human preference and that we like to be associated with names that are respected up broadly.
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I don't think that ever changes necessarily. A couple things that sort of tie into maybe a use case. And I mentioned to you my penchant for going to the last chapter and seeing how the story ends. And there was a narrative in section 8.3.1, I think, that talked about the tokenization of anything. And you could take, and we talked about the Constitution, a piece of artwork, an expensive car, and you could tokenize it and sell shares and off you go. And I think that's a model that probably has its roots more in Tradfi than DeFi because it's just chopping up an asset. And if you look at IBM as an example, it's not a public company. Somebody created a public proxy, they created a specialist network, they created a settlement system, custody, and they were able to cut up IBM into finite units called shares of stock. So I think that concept is nothing terribly new, although it's going to be much more efficient that if you and I want to settle a trade for a Rembrandt, why can't we find each other in the blockchain agreeing a price and off we go? So I can see the power of blockchain there. But if I think about then taking that into what a DAO is and use cases for a dao, and you may have covered some of the book, but when you and I were together at lunch, I said to you, well, Daniel, let's assume for a moment Kaya did not even exist. And now that I'm retired, I don't care. Maybe Paulina does. But let's for argument's sake say it doesn't exist. And you've got the big four PE shops as an example and they get together and say, okay, fund X plus one is going to have all individual assets in it. And we could asset gather and we could all do quite well. But for this to be sustainable, these clients have got to know what they're buying. And it's important for us to democratize education before we democratize product. Who's going to do this? They all get together. Why don't we all do it together? Let's create a DAO that's focused on transparent education for the individual investor. So that could be a concept that maybe it's a non for profit, just like CAIA is. So if I stop there, then I think my mind wanders into more of a tradfi solution, which is, okay, we've got to go and find somebody to write the curriculum, we've got to go and find somebody to write the exam. We have to go and hire somebody to go out and tell the story. We have to hire Paulina so she can stay up late at night and do podcasts in Singapore with me. And the list goes on and on. And those people need a salary. I get the concept up to the point where these GPS are now trying to implement it and then I kind of get lost.
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B
So let me point out a few things that are perhaps different to what you just described. Number one, DAOs are not always about what is effectively securitization in the traditional finance realm. You also can tokenize other things. They might be services that are perhaps akin to public goods. You know how Alina Ostrom did a lot of research around public goods, whether it's fish in the ocean or water reservoirs that basically are better governed if a community looks after them rather than organizing it as a for profit company. So you can think of some of the services that these entrepreneurs propose and run on top of a blockchain like Ethereum as a public good. So for example, somebody said there's so many tokens on top of these smart contract platforms, they need to be exchangeable without an intermediary. So they created what is called a decentralized exchange. And that decentralized exchange effectively becomes like a public good and then is also perhaps better governed in that way. So that's kind of one point. The second point is you mentioned that of course you eventually need some people to do the work rather than going out and hiring them in the traditional sense, at least in theory, what happens in the dao is that interested community members will just chip in. And perhaps maybe there's a grant system where if you resolve a particular problem that the dao faces, could be as simple as creating the exam questions. In your example, there's a grant, some sort of bounty on top of that, five grand for the person who can come up with a comprehensive list of questions in that sense. And then maybe you have the similar thing for marketing and you have the similar thing for other kind of products or services that you need in that context.
- [23:08]
A
So in that example, then if I refine my definition, then maybe the community objective is we're not going to sell any private product, anybody that doesn't understand what they're buying in the first place, and you get all of the big PE shops or private capital shops to come together. And I think that would be a very good thing to agree upon. So they're trying to protect the end investor, which is a common good, as opposed to a profit making motivation. And maybe Kaya sits outside of the dao where if people don't make it through the community to say, hey, you can come in and look at my warehouse on the shelf, maybe they've got to go someplace else first. And that's maybe Kaya. So would that be a more apt description where the community is more focused on the wherewithal and the health and the long term nature of the investor and where they're putting their money?
- [23:57]
B
It could be. But I think there is one additional point that I briefly wanted to highlight and that is that if you look at the daos that are out there today, they are really very bottom up type of organizations. I mean, sure, some young entrepreneur took the leap of faith and started it, but then they grew their community and it's often a community of individuals. What you're effectively proposing here is to get a community of investment managers together. I can't say for sure how that is going to pan out, but I do want to share one little detail that I think about a lot and that is the ability of financial services companies, traditional ones, to collaborate and perhaps do something together, maybe in the form of a consortium or so on. I've been in broader finance for 25 years and I've only seen that happen successfully twice. There was Swift, a payments network, and then there was also the fix protocol, which is a protocol to basically send orders to markets and get trade executions back and by now do a whole bunch of other things. Those were the only two projects where basically people from the industry got together and said, yeah, we're going to do this and they still exist today. Everything else unfortunately has collapsed because eventually you get to a stage where one of the big actors says, yeah, I disagree with the mission and I'm going to do it differently. I'm going to do it by myself because I think there's some profit opportunity for me to leapfrog ahead of everyone else. So I don't have the solution here. But one of the challenges is that if corporations get together, sometimes it makes the network, as it were, a little bit more vulnerable to these fat tail events where somebody says, oh no, I'm running in a different direction now. And then it all doesn't work. But I'd be the last person to say I'm not interested if such organization came to me and say, can you help us a little bit around the DAO side? It's definitely interesting.
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Chris Addy, who's the CEO and I think founder of Castle hall, he's been a guest on this platform and Castle hall is a big Due diligence shop and they've seen it all and they're constantly having to innovate their approach. And similar to what you talked about, about global cooperation, he mentioned the Master ISDA agreement and he said, wouldn't it be lovely if there was a Master ISDA agreement for private equity fees where everything was codified and there was only one way of doing it? And I think it's an awesome concept. I think it happens in fantasy land, because I think there that ship has sailed. You say it's so hard to get everybody's business interests aligned around a common concept. Getting back to my concept of crowdfunding, an objective for a community approach to the end investor, maybe a more apt example would be this Business Roundtable that might just be a US phenomena where it's the company joining, but there's a named executive, it's usually the CEO. So they're stepping maybe out of their CEO role. And I think the Business Roundtable is a not for profit. I don't know, maybe I'll get the head of the Business Roundtable on this podcast. But I think they're getting together. And one of their great pronouncements which finally fell by the wayside is I think in 2019, just before COVID they said, it's not the shareholder, it's the stakeholder. We're focused on the stakeholder then I think Steve Schwarzman is one example. He didn't sign it because he said, no, no. My responsibility as the CEO of a public company is to bring the very best return to my end investor. And I want to treat my employees right, I want to treat my vendors right. But you should do what you want to do with your after tax profits. My responsibility as a CEO is to run the company. And I don't think he's terribly wrong on that. But it just shows the alignment of interest, even at a roundtable can be difficult too.
- [27:54]
B
I agree. And what's interesting here, tying it all back to daos, is that at the moment, these DAO tokens that represent a voting right in a DAO organization are not securities. And often that is the case because. Because they also don't have a cash flow right, they just have the voting right. And if you think about what makes a security, I mean, how we test and all that aside is basically the right to cash flow and the right of control. So if you only have the right of control, then it's slightly different. And to talk about stakeholders in the context of these decentralized autonomous organizations is much more suitable because you have different roles. Some of them contribute. Maybe they write the questions. Some of them perhaps are the initial seeders of the idea. They provide capital. Some of them do other things that are relevant to the mission of the dao.
- [28:47]
A
Maybe in the remaining few minutes we have, Daniel, two things. And you could take your time expanding on the answer. You give back a lot in the classroom. And anybody of my generation that looks at any of this innovation dismisses Bitcoin or. Or anything else, I think they do it at their own peril, because this is all this next generation knows. So while I'm trapped in a tradfi body, they don't know what tradfi is from a hole in the wall. All they know is defi. I want to maybe get your observations on this next leadership group coming up and how that's going to impact ordinary business and commerce, because it's going to be probably very unlike what I witnessed in the course of my career. And then secondly, generative AI. I don't know if that ties into daos and their operation, but does that accelerate trends and changes?
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B
So let me start with the first part. It is interesting that there are different views depending on what generation you look at, but in a way, with the book, we are trying to bridge that gap a little bit, because the book is a lot about how traditional financial institutions and the people in them can then start to learn more about DAOs so that they can interact with that new world. We had this hunch that this was something that is quite important to do because we saw it on the horizon. And while we were writing, one of the larger DAOs actually put out an RFP to investment managers, traditional investment managers, and said, hey, we've got a billion dollars. We want to basically put it into a money market fund. Can you just propose to us and explain to us why we should pick you over somebody else? So as we were writing, it was already happening, and these people who basically knew only about crypto and defi and so on, suddenly wanted to move closer to tradfi. And then that also triggered that people in tradfi, they're keen for new business. They would say, okay, there's this new form of organization that now suddenly may need financial services. I want to be involved in that. So my summary, I guess, would be both generations have to learn about each other. That would be probably most beneficial.
- [31:02]
A
The business model that we know and love is generally still in place, subject to changes in evolution. But the interaction with daos is part of their business model. That's what will change? Or would you see that a traditional private equity shop is now a dao? I don't know if I can see that for future.
- [31:19]
B
Things move in both directions at the same time. So you have, for example, very good article by Professor Andreas park of Rotman, who wrote about what if US equity markets would operate on a decentralized exchange. And he finds, at least in theory, that there's billions of dollars to be saved if that was to happen. So there is this emergence of decentralized technology overall that can have a positive impact on traditional finance. But then at the same time, it also goes the other way around, where you have these new technology platforms that traditionally want to either service a traditional financial company or they want to become the customer because they have some need. Perhaps the treasurer or the people who are in charge of the treasury realized we cannot just have our own token because suddenly we lose billions of dollars. Just if an election comes out the other way or something like that is really true that both sides are moving, Both sides are providing services perhaps to each other, and sometimes they're also competing.
- [32:25]
A
Generative AI. What's the impact? Is that outside the scope in terms of things you think about for dao?
- [32:31]
B
This is an example of how swiftly all of this stuff moves. So when we wrote the book, it was not a concern, apart from the fact that I started using it for my own coding and all that sort of thing. But now there's this phenomenon of the AI agent. And the AI agent is basically a LLM based agent that can interact with people on social media and share content and answer questions and so on. And guess what? People tokenize that. So now there are crypto tokens that basically tokenize these activities of the AI agents or the ecosystem of AI agents. I'm pretty sure that at least one of them is probably also organized as a dao. So there is a little bit of a convergence there. But what I do want to say is that both blockchain and AI are both in their own right, extremely complicated and not so easy to understand. I always shy away when people talk about them in the same sentence because to me it's like saying, do you think physics has anything to do with biology? Well, now we know there is, but you kind of need a Nobel Prize in both to understand it properly. So I'm always very humble on that because I'm not really an AI specialist.
- [33:45]
A
And I think back to something you mentioned before. If I think about Tradfi and DeFi, I could see the efficiencies of moving the Whole equity market onto a blockchain and you'd get a lot of friction out. Trade fails, counterparty, risk all moves toward the advantage of both buyer and seller. But what about permission versus an open blockchain? Somebody's got to play, at least in some parts of the market, put a circuit breaker in place and regulation as well. And these have been concepts that have stood the test of time. So I think permissionless versus permission blockchains, I think when it gets to finance and then regulation, it's got to move and maybe move more quickly than it has, but I think that's hopefully still going to be there to protect the end investor to some degree.
- [34:32]
B
Of course these things change over time and bit by bit and there's no okay, now it all works on a blockchain. That is obviously the wrong expectation. I want to say a few things about public versus private blockchains. There's a bit of a misconception that you cannot prove who you are on a public blockchain. There are new cryptographic methods, zero knowledge proofs, for example, multiparty computation, fully homomorphic encryption and so on. That can be used in the context of what traditionally we achieved with know your customer processes. And that's very encouraging because you are now at a level where you can basically prove who you are and who you're not. That's very important. This is also a concept called accountability and therefore financial services institutions should be able to interact with you on that basis. Now it sounds a little bit futuristic. I'm very sure that it will come because what you have on the other end is basically huge developments on the side of privacy protection. And basically there's lots of emphasis, at least in Singapore, there's Personal Data Protection act, in Europe you have GDPR and so on. So there are frameworks that protect the privacy of the individuals. I think these things will eventually converge so we can use permissionless blockchain technology to implement some of these things. When it comes to financial regulation in particular and how that affects DeFi, there's a very interesting paper by Douglas Anna, a professor of Hong Kong Yu, that basically proposes that a lot of the regulatory rules that we have in public markets, for example, today, could be implemented in the smart contract. So before a decentralized exchange of the latest generation for equity markets, for example, goes live, you could have not only the smart contract auditors that look for IT vulnerabilities, you could also have a lawyer look at them and say, okay, does this platform manage front running or pump and dump schemes or things that we know that in traditional markets are not supposed to happen and let the smart contract handle with it. It's very interesting especially because the paper is not written by a technologist. Douglas is a lawyer professor of law so he looks at it from the legal standpoint. So lots of opportunity. We still have lots of things to explore and hopefully implement in the future.
- [36:59]
A
Well, as I've said to so many students that I talk to and you have a much bigger impact as a full time or maybe a semi full time lecturer in Singapore. If I think about Alpha, it's found in pockets of great inefficiency and I think there's very much a concept of career alpha and coming into this industry it can be very, very interesting for a young person, maybe scary for somebody mid career because they could be disrupted right out of a job but maybe there's something they can do about that as well. But I think there's so many entry points into our industry now, people with technology backgrounds, science backgrounds, either biology or physics and traditional finance as well and defi. So it's going to be very interesting and it's going to be happening certainly in my lifetime even though I've moved towards semi retirement. So it's going to be very interesting to watch and I look Forward to a 2.0 version of the book Daniel. But I think it's more approachable now as a result of this conversation. So I'm going to go back and I won't start with chapter eight. Maybe I'll start with chapter one this time around and try to figure it out.
- [38:04]
B
Awesome. Fantastic. I'm so thankful that you gave me opportunity to join you today. It's really good fun.
- [38:09]
A
It's a lot of fun. Appreciate it. Thanks Daniel. All the best. Thank you for listening to Educational Alpha. I'm your host, Bill Kelly. Learn more about the Kaya association and subscribe to the show at kaya. Org. That's caia. Org. See you next time.