There aren’t many billionaires that understand cryptocurrencies like Mark Cuban. Most large investors take an interest in Bitcoin and maybe Ethereum. Mark Cuban however, really understands the technology and the use behind cryptocurrencies. Mark Cuban is especially fond of DeFi. In a recent article on his blog he talked about decentralized finance and why he likes DeFi so much.
Mark Cuban has been involved in digital currencies for a while now. His basketball team, the Dallas Mavericks accept Dogecoin in the fan shop, Mark has experimented with NFT’s and he is a big fan of Have and Matic.
In a recent essay, Mark Cuban wrote about DeFi and expressed his big passion for the industry. In one excerpt he says:
“The foundation of decentralization is built upon an independent party, usually called miners in Proof Of Work Networks like BTC or validators in Proof of Stake Networks like Polygon Matic and a few other crypto descriptive words, putting up their own capital to provide computing resources in order to support the network platform. Brilliant.”
The value of DeFi
Cuban said that banks and traditional finance businesses should be afraid. Because businesses with a centralized infrastructure have to raise money whereas decentralized companies like Polygon don’t have to raise any money. Their yield farming program provides Polygon holders an incentive to stake their tokens for rewards. Therefore, the Polygon network has access to money lended to them by token holders, and token holders are given juicy rewards for providing capital. In other words, Cuban says DeFi is much more efficient than traditional finance infrastructures.
Furthermore Cuban said:
“So where a crypto based business competes with a traditional business, the crypto business may have a significat cost of capital and cost of operations advantage. There are a lot of financial institutions that should be concerned.”
The value of crypto ecosystems are based on what’s known as metcalfe’s law. Metcalfe’s law means the value of a network is equal to the amount of people in a network sqaured. So, the more token holders there are in the Polygon network, for example, the more valuable the ecosystem becomes.
Cuban also talked at length about DEXs (Decentralized Exchanges). He said he is a user of a variety of different decentralized including Uniswap and spoke how highly he felt about liquidity pools. Liquidity pools were invented in 2017 with the release of Uniswap, the first decentralized exchange. Cuban mentioned that he is the only liquidty provider on one particular liquidity pool on Quickswap. This means he receives 100% of the transaction fees users pay in order to conduct the trade.
Mark Cuban likes DeFi
Cuban seems to be in full support of the DeFi movement. One final point he makes near the end of the essay is that he highly favors companies with no central authority. He said:
“One place that these organizations are VERY DIFFERENT is that they are not based in the USA and they are not corporations. They are foundations. They are Decentralized in their governance. NO ONE owns majority control.”
When no central authority can mandate controls, this creates a lot of freedom that traditional finance does not include. Cuban’s essay represents that DeFi is a people’s movement. It gives people the opportunity to loan out their own assets instead of banks using other people’s money to earn interests on.