"Sister Wood" Cathie Wood: DeFi is hollowing out banks and accelerating innovation in non-crypto fields

Original title: ""wood sister"Original title: "

wood sister

Cathie Wood: DeFi is hollowing out the bank, ETH will become the native bond of the Internet", author Overnight Porridge

Note: The original author is bankless co-founder David Hoffman.

Last Friday, Cathie Wood from Ark Invest chatted with Ryan and me about her views on crypto. (full podcast here)

ARK does one thing: invest in technologies that define the future.

They've done a really good job of it, and what's more, ARK invests in paradigm-breaking technologies while the rest of the market is fundamentally mispricing them.

Ms. Wood believes that "the future of investment is the future of investment". It is this argument that has made ARK a financial giant with assets under management of 75 billion US dollars.

While older financial institutions trace the market back to build metrics and models to guide investments, ARK takes a forward-looking view of the market by looking to the future and investing in the technologies that will shape it.

ARK believes that we are on the cusp of five paradigm-breaking technologies all making great strides in parallel—blockchain technology being one of them.

Similar to our Crypto Renaissance theory (Crypto will help to usher in a new era similar to the Renaissance in the 14th century), Sister Wood believes that in the next 10-20 years, human beings will usher in the largest period of technological change in history.

5 large technology platforms have entered the growth phase of the adoption S-curve at almost the same time...which has never happened in history.

Joining the podcast are Placeholder VC's Chris Burniske, who led ARK down the Crypto rabbit hole in 2014, and ARK's current Crypto analyst, Yassine Elmandjra.

This might be the best podcast we've ever recorded, and it's a must-listen.

1. DeFi is hollowing out the banks (and the banks know it)

Why?

In order to understand the broader environment of the banking industry, Sister Mu listened to JPMorgan Chase's earnings conference call, and then she was surprised to find that the bank's loan growth during the economic recovery ... was negative.

Why?

Because crypto! Given DeFi’s yield advantage and exploding demand, even if it only results in a slight revenue loss for banks, this loss still has a significant impact on growth expectations for the banking industry as a whole. Stock prices are set on margin, and marginal growth rates matter.

Look at this for details👇

What if the regulatory pressure we've seen recently is because banks are scared? 👀

Sister Wood hinted that this might be the case.

Given that the banking system is one of the most entrenched institutions in existence, this is not surprising...

2. ETH staking may become the new "risk-free interest rate"

Chris Burniske asked Ms. Wood if she could envision a future in which Ethereum’s risk-minimizing rate provides a new benchmark for internet asset valuations?

This is the idea that the staking rate of ETH may be used as a new benchmark for the performance of digital asset portfolios, and Sister Mumu took it a step further by comparing the reliable yield of staking ETH with the monetary policy of the central bank.

This elevates ETH to the status of a global macro force akin to the U.S. bond market, and not just an internet-native economy.

look at this 👇

In short, Sister Wood believes that ETH can become an Internet bond.

3. DeFi will accelerate innovation in non-crypto fields

I asked Sister Wood and Chris:

"Do you think that the capital coordination ability of Ethereum and the open financial services of DeFi will make innovation in other fields happen faster?"

One of ARK's core thesis is that the growth of each technology platform has the ability to accelerate the growth of all other technology platforms.

Sister Mumu linked Ethereum's capital coordination rights with 'The DAO', which raised $150 million in ETH in 2016, and bluntly supported how DeFi can provide "frictionless financing".

What happens to the pace of innovation when financial and capital coordination tools are free and open?

See what Chris Burniske said👇

Biggest Takeaway: Don't Look Back

Perhaps my biggest takeaway is that Sister Mu Mu put together backward-looking institutions and forward-looking retail investors.

Instead of looking into the future to inform their investments, these institutions use historical analysis and financial models to allocate investments, which essentially supports the assumption that the future looks like the past.

No wonder they missed crypto!

If we have learned anything about the 2020s, it is that we live in far more chaotic times than we predicted, and if you expect history to inform your models about the future, you are making a fundamental mistake.

That means the door of opportunity is wide open for retail investors.

We're seeing this with TSLA...we're seeing this with crypto too.

Where institutions are resisting change, retail investors are embracing it.