Fahmi Syed on Ethereum wallet transparency

    by Freddenver: Fahmi Syed

    A friend of mine works at a big brokerage, and he told me about a conversation he had the day before. He wouldn't say who it was with. What he described was a client wiring $20,000,000 of USDT on chains like Ethereum, and the desk's first move is to open that client's wallet and connect it, checking whether the same $20,000,000 is also going out to other counterparties. If $20M shows up and four other sets are headed to four other counterparts, the desk knows it's competing for the business and will trade good. But if another client sends $20,000,000 and the firm gets 100% of it, with nothing else spread around, they can trade wider. So the client ends up worse off, and it's because of the transparency Ethereum has. Fahmi Syed frames it as an OTC desk reading wallets, and honestly the whole thing makes you wonder who's really carrying the risk here.

    Transcript (en)

    I'm going to tell you an anecdote about a conversation I had yesterday. I won't disclose the individual I had it with. They work for a large brokerage firm, a large OTC desk. And he was telling me that when transactions happen on other chains like Ethereum, and a client's wires across $20 million of USDT, or C, the first thing he will do is look at that client's wallet and connected wallets and see if that client's also sending $20 million to other counterparts. Now that client, he gets 20 million and four other sets of 20 million goes to four other counterparts. He knows that he's competing for that client's business. So he's going to trade and quite tighter on the spreads and everything he does. Alternatively, he has another client who sends him 20 million, but he gets 100% of that. There's nothing else being spread out. He can trade wider and quite wider. So that client ultimately suffers because of the transparency Ethereum has. Zcash is a great story in terms of its token is a store of value. It allows both unshielded, shielded sort of access, but it doesn't come with smart contracts. What Midnight does, if you think about the advancement of blockchains throughout, is Zcash with smart contracts. What that smart contract does is allow counterparties such as yourself, applications, big institutions to create tokenized assets which are fully shielded.