Decentralized Capital Market (DeCap)

The world is rapidly changing and updating or rather, upgrading. Especially from 2020 onwards we are witnessing developments in technology that previously could only be found in sci-fi movies. Among these technologies, we can mention drones, which today is available for teenagers as a toy.

In the field of fintech (Financial Technologies) digital currencies or to be more precise, cryptocurrencies are at the beginning of their maturity in such a way that from 2021 on, every week, there are news about the joining of companies from all over the world. Even banks and restaurants and other financial, commercial or service institutions and even governments adopt this emerging technology (Blockchain).

Even in the field of financing, concepts such as crowd funding have been introduced, and in the field of financial markets, automatic trading robots and algorithmic trading have entered the field of competition with each other, so that there are even related tournaments around the world in which the best robots and algorithms will find their way to portfolio managers and investment companies and stock exchanges. One of the oldest examples is the Renaissance Technologies, which, has helped its clients’ investment portfolios to have the best ROI compared to their competitors in the long term by designing and owning an advanced algorithm called the Renaissance Black Box.

However, if we consider the financing more fundamentally, we will see that for nearly a decade, companies have been financing part of the capital needed for liquidity, production and their services or development plans in hand throughout IPOs in stock exchanges.

In my opinion, the era of this traditional type of financing has come to an end, and finally, in less than ten years, this will be replaced by financing through the Decentralized Capital Market (DeCap) and with the help of cryptocurrency liquidity pools. Currently (May 21st, 2020), the market cap of all digital currencies is about two trillion dollars. On the other hand, the market cap of a part of the shares of Apple that is offered in the stock market is almost the same. This means that if all cryptocurrencies are injected (staked) by their owners in a Liquidity Pool, they will be able to provide only the required capital for the Apple shares offered on the New York Stock Exchange.

Considering the growing trend of the crypto market and the emerging of tools such as lending protocols and decentralized financing (DeFi), there is NOT a long way to the point where small to medium companies and then large companies to finance the capital they required through DeCap.

Obviously, in the meantime, the role of stock brokers will faded gradually because decentralized cryptocurrency brokerages such as DEXes will take their place eventually.