From Rollup-Centric to Economic Headquarters

Over the past decade, decentralized finance (DeFi) has drastically changed for the better. Yet, many trading models remain inefficient, failing to align long-term incentives for liquidity providers, traders, and governance participants. Traditional DEXs often present significant challenges for retail users and institutions, primarily due to liquidity inefficiencies, capital misallocation, and a short-term focus that undermines long-term engagement. Liquidity issues arise from fragmented pools, where low liquidity results in slippage and high transaction costs, while impermanent loss deters long-term participation from liquidity providers. Moreover, the rewards in liquidity mining are typically volatile and unsustainable, leading to a lack of stable liquidity. Capital is often inefficiently distributed across pools, with either an over-concentration in low-demand pairs or under-capitalization in high-demand ones. The reliance on short-term incentives discourages long-term liquidity provision, and the disconnection between governance and users further compounds the issue, leaving strategic decisions misaligned with the needs of liquidity providers.

Blockchain technology has progressed from its origins with Bitcoin. We’ve witnessed DeFi disrupt traditional finance, NFTs redefine digital ownership, and now we are starting to see advancements in Decentralized Physical Infrastructure Networks (DePIN). DePIN employs blockchain technology to decentralize real-world systems like internet bandwidth and wireless connectivity, distributing ownership to participants in the decentralized network.

The original Bitcoin whitepaper was centered around a simple idea – a peer-to-peer, electronic cash system. This seminal document also laid the foundation for broader ideas such as smart contracts, decentralized autonomous organizations (DAOs), and what was then referred to as "Smart Property." The vision was to enable ownership and management of various assets—like cars, company shares, or software rights—on a decentralized blockchain network.

The October 2024 Treasury Borrowing Advisory Committee (TBAC) report provides an in-depth examination of the evolving relationship between digital assets, particularly stablecoins, and the U.S. Treasury market. As digital assets continue to grow in prominence, TBAC outlines the impacts on the Treasury market, ongoing blockchain initiatives, and the potential benefits and challenges of tokenizing U.S. Treasuries. This article explores the TBAC report’s key findings, offering insights into the future of Treasury markets in the digital age.

Centralization exists because it was the simplest way to leverage capital and information to create market opportunities.

As global algorithmic trading evolved over the past two decades, it has come to represent the bulk of trading in traditional financial markets, significantly improving liquidity and efficiency. However, the digital asset market has lagged, lacking the necessary infrastructure for institutional-level algorithmic trading. High fees, complex integrations, and privacy concerns have led to inefficiencies and hampered growth. While traditional algorithmic trading systems, managed by investment banks, execute trades at optimal prices and volumes, translating this efficiency to digital assets has proven challenging.

Introduction to Stablecoins: Money has served as the cornerstone of economic systems for millennia, evolving first from tangible items to today's digital forms. This progression mirrors continuous efforts to enhance transactional efficiency, security, and reliability across an increasingly intricate globalized economy. A pivotal moment in financial history was the establishment of the Bretton Woods system post-World War II, which linked global currencies to the U.S. dollar and indirectly to gold. However, this system unraveled in 1971, paving the way for the rise of fiat currencies regulated by central governments and backed by nothing more than the “full faith and credit” of the issuing government. The 2008 financial crisis eroded trust in the conventional banking system and spurred the creation of Bitcoin. A decentralized monetary system, designed to operate independently from central banks and government control.

The registration of Varys Capital Ventures (CEIC) was a joint effort executed by FundRock Investment Management Service (ME) Ltd. and Varys Capital, a Cayman-registered company.