Backing Arwen – Jill Carlson
I started my career on the chaos of a trading desk. Every day was a hectic sprint of executing buys and sells, managing risk, and keeping up with headlines to reach market close every day. One of the joys of being a junior trader was that, at the end of each day, I got to spend a few hours reconciling trades, chatting with our middle- and back-office teams, and making sure that everything was on its way to being properly cleared and settled.
I got to learn the ins and outs of Wall Street’s backend, along with all of its quirks and inefficiencies.I dealt with failures-to-deliver. I got on the phone with the DTCC and Euroclear. I did deep dives into what our counterparty risk was every night.
I had followed the 2008 crisis closely. I thought I understood the problem: the housing bubble, overleveraged firms. But it was not until I spent a few years exploring Wall Street’s plumbing that I understood the opaque tangled web of risk it really is. It is one thing for counterparties to execute trades against one another, but it’s another thing for counterparties to then have to make good on those trades. If one side can’t deliver, if they are insolvent or don’t have access to the assets they promised, then whole system can domino and come falling down.
When I first started digging into the promises of blockchain technology in 2013, I, like many with my background, thought that this technology held the answer to the problems of clearing and settlement. The irony that I have come to appreciate over the last 7 years is that even cryptocurrencies, blockchain-based technologies, face the same issues of clearing and settlement that I faced on Wall Street. Traders of Bitcoin and ethereum face the same risks and dependencies on centralized third parties, and create the same webs of risk, as traders of bonds and equities.
The irony here is that cryptocurrencies, themselves peer-to-peer technologies, have created more intermediaries than they have destroyed. Until now, there has been no way to mitigate the risk inherent in settling a trade, without resorting to the introduction of a centralized intermediary, which introduces its own risk. It doesn’t matter how securely assets are custodied if, in order to execute a trade, they are not secure while in transit, during the clearing and settlement process.
This is the importance of Arwen. Arwen is the first and best solution in the market that starts to solve for security during the clearing and settlement of a trade. Arwen is a protocol that enables atomic swaps (trades) to occur without having to trust exchanges or counterparties. Arwen provides software, APIs, and a UI to enable traders, exchanges, custodians, and others to trade securely.
Today, Arwen supports trading and exchange of bitcoin, ethereum, bitcoin cash and litecoin with plans to expand the offering. For me, recalling the headaches of Wall Street’s clearing and settlement systems, it’s not hard to imagine Arwen one day supporting stocks, bonds, derivatives, futures, and all manner of securities. Those who are working towards tokenizing assets should look at Arwen, for Arwen will be the key to unlocking those promises of better, more secure, peer-to-peer clearing and settlement.
I am thrilled to partner with Sharon as she and her team build what is the future of financial infrastructure. I also couldn’t be more excited to have a further excuse to spend time with our friends at Coinshares, Collaborative, Underscore, and DG Lab Fund as well as all of the phenomenal angels and advisors who have invested money and time already.
To the future 🚀
Published at Wed, 05 Feb 2020 21:50:47 +0000
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