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Session Title: "De-Fi-ts-all: pump & dump or lump & bump"
Speaker: Guilia Napolitano, PhD Student in Management University of Naples Federico II
Watch the Session: https://app.knowmia.com/kPuf

Session description: Decentralized finance, a blockchain-based financial instrument, has gained traction in recent years, with the aim of overcoming the cumbersome aspects of the centralized financial system: 238 DeFi projects were listed in DeFiprime.com, the market capitalization of the top 100 DeFi tokens was 100 billion US$, while the market value of the top 10 DeFi tokens was approximately 68.6% per cent of the total, as of 11/14/2021 (https://defimarketcap.io/). This figure is comparable to that of the fifth U.S. commercial bank/commercial bank holding company ranked by total assets, Goldman Sachs, which had a market capitalization (as of 12/31/2020) of 100 US$ billion. Furthermore, the proof that an increasing percentage of users is placing money into smart contracts is the growing amount of locked funds in DeFi projects: on 11/14/2021 the current value locked was about 112 US$ billion, and the top 10 DeFi projects represented almost 106 US$ billion, 94% per cent of the total (https://defipulse.com/). Anyway, for these numbers be meaningful, it’s crucial to spread cryptofinance to risk-averse Gen Zers and to customize solutions for banking the unbanked/underbanked, for providing appropriate regulation and for implementing De-Fi aggregator platforms and clarifying the implications of smart contracts. In particular, in smart contracts there are embedded instructions, which automatically (with no intermediaries, allowing more direct payment flows) execute transactions if certain conditions are met: this caused an economic paradigm shift, from a closed financial system to a universally accessible economy that is based on open protocols that are interoperable, programmable and composable. This “lean” technology reshapes financial markets and could provide a foundational technology to power Green Finance, but questions raise regarding whether cryptocurrencies eliminate the necessity of traditional currencies (the top one being the dollar). Proponents of DeFi envision a powerful tool for potentially transforming the infrastructure of global finance into a more inclusive and secure system: this could drive sustainable business practices, promoting transparency, traceability (assuring the privacy of digital footprint), and overall accountability, to fulfill the 17 SDGs by 2030, the Paris Agreement and the objectives of the EU Green Deal. This by reducing information asymmetry, enhancing open innovation, reducing transaction costs, providing more accurate transaction records (that can be forecasted) and money in a stream (small recurring payments), rather than a lump sum. On a problematic note, the proliferation of cryptocurrencies (as of 2021, there are nearly over 6000) have made it easier to conduct pump and dump schemes and in this unregulated environment there are a lot of margins for abuse (those schemes deceive stakeholders, both when the price goes up -pump- and when it goes down -dump-). There is also a “blockchain trilemma” to tackle, given the difficulty to simultaneously satisfy correctness, decentralization and cost efficiency: in fact, correctness/security (to avoid fraud) requires either a centralized entity or a waste of physical resources. In this scenario, since cryptofinance appears a more trustworthy and accessible solution, but has also the potential to undermine accountability and erode enforcement’s effectiveness, we will investigate to what extent De-Fi’s marketability trumps accountability.

Bio:  Napolitano is a 24 year’s old economist with an unrelenting passion for learning constructive insights on well-being, self-growth and lifelong betterment. During her degree studies, she was inspired by the principles of economics no longer as an end but as a medium and the theory that ethics and economics are intertwined in a triple bottom line perspective, thus analyzing the resilience of sustainable funds to the Coronavirus pandemic and the growing market interest towards impact and sustainable finance. She has won two times a national prize and, after graduating cum laude both from the bachelor and the master's degree, she was invited as a keynote speaker at the 12th edition of the Workshop on Cooperative and Responsible Finance for Development, promoted by Euricse, and she is now enrolled in a Master of Public Administration (MPA). She aims to sustain cognitive transformations, help others change perspectives on critical situations, and make herself the spokesperson for new interpretative models and techniques to develop resilience, especially during unstable times.