Domain Daily: Banks and Blockchains

The Dose

  • Remaking Repo

  • GameStop Wallet

  • Planets of the Apps

Banks and Blockchain

French bank BNP Paribas has joined JPMorgan's Onyx blockchain platform. Goldman Sachs has been a user since last year. 

The Point: Onyx is proof that blockchain technology is already disrupting legacy markets. Specifically, Onyx is remaking the (*jargon alert*) intraday repurchase agreement (Repo) market. Repurchases are pretty much what they sound like. A bank will sell an asset, typically a government bond, and agree to repurchase it later at a slightly higher price. Repo isn’t well known (or understood) by most people, but it’s among the most important of all financial markets. In the U.S. alone, there are about $4 trillion of repo transactions each day.

Traditionally, handling the transactions required manual intervention and time. And time equals risk. Instead, Onyx moves the repo market to a permissioned blockchain with smart contracts that allow for quick exchanges of cash. In the legacy system, it's challenging to use the same asset in a repo agreement multiple times on the same day. Onyx makes it possible for banks to sell a bond in the morning, repurchase it by lunch, and have it back on their balance sheet by dessert. 

What Is DeFi?

HODL on to Your Wallet

In preparation for its upcoming NFT marketplace, GameStop rolled out a self-custodial wallet for cryptocurrencies and NFTs.

The Point: GameStop plans to debut its NFT marketplace this summer. Releasing a wallet is a step toward building its NFT customer base and ecosystem. The wallet is a self-custodial (users hold the keys to their assets), Ethereum-compatible wallet. There are lots of wallets out there. But so far, none of them have really perfected the user experience. If GameStop has done that, its wallet could give its marketplace a leg up on the competition. But before you go and download it, take note: the company tweeted it's still in beta and to "not add more funds than you are comfortable with."

What Are NFTs?

Space Race

Blockchain is heading to space. Lockheed Martin and the Filecoin Foundation are collaborating to run the InterPlanetary File System (a blockchain) from a satellite. The protocol's creators say it could speed up data transmission across the solar system.

The Point: Here's an exciting application for blockchain technology. Data can't travel faster than the speed of light. On Earth, that's rarely an issue. An email can do three roundtrips of the planet in the blink of an eye. But, for example, sending data to Mars takes about three minutes (assuming it's traveling at the speed of light). The InterPlanetary File System (IPFS) blockchain could help reduce the lag. Rather than using satellites as relays back to Earth, they'd be decentralized databases spread throughout space. "Using IPFS, data does not need to go back and forth from Earth with every click," said Marta Belcher, president and chair of Filecoin Foundation. "Content is retrieved from wherever is closest, rather than being retrieved from a particular server in a particular place."

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*The content team responsible for the above content uses primary and secondary sources they believe to be accurate, which includes but is not limited to Bloomberg, The Wall Street Journal, Financial Times, and CNBC, among others. 

*  Domain Money Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, has (as of this writing) the following assets mentioned in this communication as part of its managed portfolios: GS, FIL