Takeaways from Devcon VI + Institutions Reveal Crypto Offerings

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Developer Community Unite! 🇨🇴

Thousands of crypto and Web3 enthusiasts gathered in Bogotá, Colombia, for Devcon VI — the biggest developer conference of the year. It was four days of technical talks, networking and catching wind of new projects that contribute to the industry’s evolving landscape. Considering it has been three years since the last Devcon due to the pandemic, we were excited to be back with the community!

Three years feels like a lifetime in crypto. We have seen the rise of many successful DeFi protocols (i.e., yearn.finance, SudoSwap) and the colossal failure of others (i.e., Terra’s UST/LUNA). In short, there was a lot of catching up to do.

It’s important for us to attend conferences to show our support for the community and take note of emerging technologies that contribute to the R&D process of our core business. We also can’t forget to mention the cool swag!

Six Takeaways From Devcon VI 💡

Dozens of talks and workshops took place during Devcon VI, and it was hard to narrow the list down to a few favourites. Check out our latest blog where we highlight six takeaways from this year’s event.

Rising Concerns Over Centralization 🔄

Centralization is a sensitive topic and was a common concern expressed throughout the week.

Danny Ryan, researcher for Ethereum Foundation, said it best when he talked about the future of the world’s largest smart contract platform during the opening ceremony.

“We’re optimizing for an infinite game…for Ethereum to run for another 50 to100+ years and be a foundational protocol of the Internet and of humanity.”

So what is centralization and how does it pose a threat to Ethereum?

With more users entering the space, we’re seeing high concentrations of power among small groups of network providers. For example:

• Liquid staking provider Lido holds the majority (29%) of staked ETH deposits.
• Roughly 65% of Ethereum’s nodes are cloud hosted, and half of them use Amazon Web Services (AWS).
• Nearly 80% of Ethereum node operators use Geth as an execution layer client. Ethereum uses multiple clients (Geth being one of them) and if a single client is used by two thirds (66%) of validators, it poses a risk that can result in disrupting the chain and monetary loss for node operators.

From a traditional finance perspective, “centralization is a natural evolution of the financialization of cryptocurrency markets,” according to Sheena Shah, analyst for Morgan Stanley. However, to those in the community, it threatens the credible neutrality of Ethereum and overall health of the network.

Why Decentralization Matters ✅

Ryan explained that shortcuts like centralization are available to speed up the timeline and development of the protocol, but this isn’t what Ethereum developers strive for. They rely on a robust ecosystem of network clients that act in concert with each other, which means it can sometimes take awhile to implement changes to the protocol. Multiple clients creates a failsafe system so if one client goes down, the others still function, which optimizes for the continuity of the network.

Our Take: Assuming technology (at times) will fail, it’s not about avoiding failures entirely, but having the ability to recover from them. Ethereum’s philosophy is built upon decentralization and network resiliency, something we believe is essential to the protocol’s success now and in the future. This is also the safest route for both retail and institutional investors who wish to inject large amounts of capital into the ecosystem. Centralization creates ripe conditions for single points of failure and attacks on the network. Institutions should consider how to disperse their assets across multiple custodians and service providers to avoid exacerbating the issue of centralization and threatening the entire security model of Ethereum.

Institutional Adoptions Takes Hold 🏦

October has been a busy month for institutional adoption of crypto assets. Here are a few big developments that are worth noting:

• BNY Mellon has added bitcoin and ether to its custodial offerings, a decision the bank’s CEO Robin Vince said was driven by client demand.
• Fidelity is planning to roll out ether trading for institutions starting October 28th.
• Google Cloud announced its teaming up with Coinbase to accept cryptocurrency payments for its cloud services. Google will also tap into Coinbase’s custody service, Coinbase Prime.
• Mastercard is launching a new program to let financial institutions offer cryptocurrency trading to their clients.

The Merge Goes Mainstream 🏄

Speaking of institutions, be sure to check out our interview with Global News about why we believe Ethereum PoS sets the stage for further adoption from investors with strong ESG mandates.

Funding Rounds, M&A Deals 🤝

• ChainSafe, a Toronto-based Web3 tools and services provider, closes a $25.7M Series A.
• Uniswap Labs announced a US$165M Series B funding round.
• Offchain Labs, the firm behind Ethereum L2 network Arbitrum, announced it is acquiring Prysmatic Labs, one of the core engineering teams behind the Merge.

Confused About Crypto? 🤔

Don’t worry, we want to help!

While we can’t provide specific investment advice, we do want to steer you in the right direction to stay informed. Please reach out to us and we’ll do our best to answer your questions.

This newsletter is geared towards traditional investors who are interested in the space. If you have suggestions on how we can improve our content or make it better, please let us know — we love feedback! Thanks for subscribing.