From Infrastructure to Investing: The Rise of On-Chain Capital Formation

• Better interoperability needed

• Panelist looks to the ground-up community around shared financial infrastructure

• Privacy on public infrastructure is important, but privacy must be balanced with the need for interoperability and security

Capital markets are gradually shifting towards more engagement with decentralized finance, putting interoperability and infrastructure considerations into focus as ties between the two worlds get stronger.

“I think we're past all the foundational points of what the infrastructure looks like. And we do need to see better interoperability amongst the change. We need to see bridges to be more available and to be secure across them,” Dixon from the Stellar Development Foundation said. 

The panel discussed the pros and cons of private vs. public blockchains, weighing up security, privacy, and infrastructure challenges as well as the impact of regulation. Solana’s Liu said regulation, despite the more favorable tone, is proving to be a hurdle to building “truly open, decentralized systems today afresh.” 

Turning to TradFi assets, Katz from Talos noted that the end goal is that all assets are digital assets. In order to move assets on-chain, the industry has to take the necessary step of adopting capital markets and some of its instruments to on-chain. Tokenization plays the role of providing backwards compatibility with the traditional sector. “I think without a doubt, we're headed to a native representation of assets on-chain, and that unlocks quite a lot,” he said. 

He pointed out that it might not be useful to think of stablecoins as a different species with a different use case, noting that they are embedded in the asset class and their importance in the cash-led component of the native tokenisation of assets. 

SC Ventures’ Manson argued that blockchain is not necessarily a silver bullet or a technology for improving everything. “I don't necessarily agree with that. I think that, you know, it's a phenomenal vehicle for settlement,“ noting that moving everything on-chain is not necessarily the answer.